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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 31, 1996
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IMAGE INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 0-21954 04-2962635
(State or other jurisdiction of (Commission File No.) (IRS Employer Identification No.)
incorporation or organization)
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1112 GEORGIA HIGHWAY 140
ARMUCHEE, GEORGIA 30105
(Address of principal executive offices, including zip code)
(706) 235-8444
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On May 31, 1996, Image Industries, Inc. (AImage@), and The Maxim
Group, Inc. ("Maxim"), entered into an Agreement and Plan of Reorganization,
pursuant to which Image will be merged with a wholly-owned subsidiary of Maxim.
Image will continue to operate as a carpet manufacturer and PET recycler.
The transaction will be consummated in a one for one exchange of the
common stock of Maxim for the issued and outstanding common stock of Image. All
outstanding stock options to acquire Image common stock will be exchanged for
stock options to acquire Maxim common stock upon the same terms and conditions
as the former Image stock option agreements. The transaction is valued at
approximately $90.7 million, based on Image's issued and outstanding common
stock (on a fully diluted basis) and Maxim's closing price on May 30, 1995 on
The Nasdaq National Market. The transaction is subject to approval by the
shareholders of Maxim and Image, appropriate regulatory approvals and the
satisfaction of certain other conditions contained in the merger agreement.
Image is a leading plastic recycler and carpet manufacturer. Image
produces residential carpet, polyester fiber, PET flake and pellets made from
recycled post consumer PET (Polyethylene terephthalate) and is vertically
integrated from the purchase of curbside collected bottles through complete
manufacturing of polyester fiber, PET flake and carpet products.
Based in the Atlanta suburb of Kennesaw, Maxim is a leading
installer of floor covering and the industry's only publicly traded franchisor.
Maxim has approximately 700 retail locations including 75 company-owned stores.
Maxim provides its network with advertising, training, merchandising services
as well as consultation in administration. Maxim also provides floor covering
products directly from the industry's manufacturers.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
2.1 - Agreement and Plan of Reorganization, dated as of May 31,
1996, by and among The Maxim Group, Inc., TMG-II Merger, Inc. and Image
Industries, Inc.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
IMAGE INDUSTRIES, INC.
Date: June 3, 1996
/s/ H. Stanley Padgett
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H. STANLEY PADGETT
President and Chief Executive Officer
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EXHIBIT NUMBER 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF MAY 31, 1996
BETWEEN
THE MAXIM GROUP, INC.,
TMG-II MERGER, INC.
AND
IMAGE INDUSTRIES, INC.
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TABLE OF CONTENTS
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ARTICLE I
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.3 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Certificate of Incorporation and Bylaws of the Surviving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Certificate of Incorporation, Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3.1 Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3.2 Maxim to Make Certificates Available . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3.3 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.4 Closing of Image Transfer Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV
Representations, Warranties and Certain Covenants of Maxim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4.5 Governmental Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4.6 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.8 Registration Statement; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.9 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.10 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.15 Executive Compensation and Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.16 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.18 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.19 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.20 Statutory Provisions; Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.21 Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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ARTICLE V
Representations, Warranties and Certain Covenants of Image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Governmental Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.9 Registration Statement; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.10 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.11 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.16 Executive Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.17 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.19 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.20 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.21 Statutory Provisions; Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.22 Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
Representations and Warranties Regarding the Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.3 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.1 Covenants of Image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.2 Covenants of Maxim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII
Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.1 Confidentiality; Standstill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.2 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.3 Approval of Stockholders 29
SECTION 8.5 Identification of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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SECTION 8.6 Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.7 Expenses; Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.8 Hart-Scott-Rodino Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.9 Stockholder Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.10 Rule 144 Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.11 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.12 Post Effectiveness Management Matters . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.13 Amendments to Maxim Certificate of Incorporation . . . . . . . . . . . . . . . . . . 33
SECTION 8.16 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.17 Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX
Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.1 Conditions to Obligations of Maxim and the Subsidiary to
Proceed with the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.2 Conditions to Obligations of Image to Proceed
with the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE X
Termination, Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XI
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.1 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . 44
SECTION 11.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.6 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.7 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Exhibit
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EXHIBITS
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Certificate of Incorporation of Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
Bylaws of Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
Opinion of Parker, Johnson, Cook & Dunlevie, Counsel to Image . . . . . . . . . . . . . . . . . . . D
Accountant's Letter of KPMG Peat Marwick LLP, Independent Accountants for Image . . . . . . . . . . E
Opinion of Smith, Gambrell & Russell, Counsel to Maxim . . . . . . . . . . . . . . . . . . . . . . F
Accountant's Letter of Arthur Andersen LLP, Independent Accountants for
Maxim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
Form of Employment Agreement for Larry M. Miller . . . . . . . . . . . . . . . . . . . . . . . . . H
Form of Employment Agreement for H. Stanley Padgett . . . . . . . . . . . . . . . . . . . . . . . . I
Form of Indemnity Agreement for Image Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . J
</TABLE>
DISCLOSURE SCHEDULES
4.2 Capitalization
4.7 Certain Maxim Changes or Events
4.9 Maxim Financial Advisor Engagement
4.10 Maxim Compliance With Law
4.11 Maxim Litigation
4.14 Maxim Tax Matters
4.15 Maxim Executive Compensation and Benefits
4.16 Maxim ERISA Compliance
4.17 Maxim Environmental Matters
4.18 Absence of Undisclosed Liabilities
4.22 Maxim Contracts
5.2 Image Options, Warrants and Other Stock Rights
5.3 Subsidiaries
5.5 No Violation
5.8 Absence of Certain Changes or Events
5.10 Image Financial Advisor Engagement
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5.11 Image Compliance with Law
5.14 Image Litigation
5.15 Image Taxes
5.16 Image Employee Compensation and Benefits
5.17 Image Compliance with ERISA
5.18 Image Environmental Matters
5.19 Absence of Undisclosed Liabilities
5.24 Image Contracts
8.14 Actions Affecting Pooling of Interests
** Exhibits and Schedules are not included with this filing.
A copy of any omitted exhibit or schedule will be furnished
supplementally to the Commission upon request.**
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
May 31, 1996, among The Maxim Group, Inc., a Delaware corporation ("Maxim"),
TMG-II Merger, Inc., a Delaware corporation (the "Subsidiary"), and Image
Industries, Inc., a Delaware corporation ("Image").
This Agreement provides for the merger of the Subsidiary, a
wholly-owned subsidiary of Maxim, with and into Image (the "Merger") in
accordance with the applicable statutes of the State of Delaware. This
Agreement is intended to constitute a plan of reorganization within the meaning
of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
The Merger
SECTION 1.1 The Merger. At the Effective Time (as defined in
Section 1.2), the Subsidiary shall be merged with and into Image in accordance
with the applicable provisions of the Delaware General Corporation Law and the
separate existence of the Subsidiary shall thereupon cease. The name of Image,
as the surviving corporation in the Merger (the "Surviving Corporation"), shall
by virtue of the Merger remain "Image Industries, Inc." Subject to the terms
and conditions hereof, the parties hereto shall take all reasonable action
necessary in accordance with applicable law and their respective charters and
bylaws to cause the Merger to be consummated as soon as is reasonably
practicable.
SECTION 1.2 Effective Time of the Merger. The Merger shall
become effective at the time when the properly executed Certificate of Merger
under the Delaware General Corporation Law is duly filed with the Secretary of
State of Delaware. The Certificate of Merger shall be filed on the date of the
closing (as set forth in Section 11.2 hereof) in the form attached hereto as
Exhibit A. When used in this Agreement, the term "Effective Time" shall mean
the date and time at which such action is completed.
SECTION 1.3 Effect of Merger. The Merger shall have the effects
set forth in Section 259 of the Delaware Corporate Code, and immediately after
the Merger, the Surviving Corporation shall possess all the rights, privileges,
powers and franchises of each of Image and the Subsidiary, and all property and
other interests due or belonging to Image and the Subsidiary shall be vested in
the Surviving Corporation.
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ARTICLE II
Certificate of Incorporation and
Bylaws of the Surviving Corporation
SECTION 2.1 Certificate of Incorporation, Bylaws. The
Certificate of Incorporation of the Subsidiary as in effect as of the Effective
Time, a copy of which is attached hereto as Exhibit B, shall be the
Certificate of Incorporation of the Surviving Corporation until altered,
amended or repealed. The Bylaws of the Subsidiary as in effect as of the
Effective Time, a copy of which is attached hereto as Exhibit C, shall be the
Bylaws of the Surviving Corporation until altered, amended or repealed.
ARTICLE III
Conversion of Shares
SECTION 3.1 Exchange Ratio. As of the Effective Time, by virtue
of the Merger and without any action on the part of any record holder thereof:
(a) Each share of Common Stock, $0.01 par value, of Image
(the "Image Common Stock") that is held by Image as treasury stock (the "Image
Treasury Stock"), shall be canceled.
(b) Each share of capital stock of the Subsidiary that is
issued and outstanding immediately prior to the Effective Time shall be
converted into one (1) share of the $1.00 par value common stock of the
Surviving Corporation, and each certificate evidencing ownership of any such
shares shall evidence ownership of the same number of shares of Common Stock of
the Surviving Corporation.
(c) Each share of Image Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of Common Stock, $0.001 par value, of Maxim (the "Maxim Common Stock")
subject, however, to the other provisions of this Article III (the number of
shares of Maxim Common Stock so issuable for each share of Image Common Stock
hereinafter referred to as the "Conversion Ratio"). No fractional shares of
Maxim Common Stock shall be issued in respect of the conversion of shares of
Image Common Stock pursuant hereto, but instead, a holder of Image Common Stock
otherwise entitled to receive a fractional share of Maxim Common Stock shall
instead receive cash in accordance with the provisions of Section 3.2(a)
hereof.
(d) The number of shares of Maxim Common Stock to be
issued pursuant to this Section 3.1 shall be adjusted for any stock dividend,
split or any combination or reclassification in respect of Maxim Common Stock
occurring after the date hereof.
(e) At the Effective Time, each holder of then
outstanding stock options, warrants, or other rights to acquire shares of
Common Stock of Image heretofore granted under any employee
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or non-employee compensation plan or arrangement of Image, shall either have
exercised such options, warrants or rights in accordance with their terms, or
to the extent not so exercised:
(i) if such options are tax-qualified incentive stock options
("ISOs") issued pursuant to the Image 1993 Stock Option Plan, shall be
deemed to have surrendered such options at the Effective Time to Maxim
in exchange for a corresponding tax qualified option to purchase
shares of Maxim Common Stock issued under the Maxim 1993 Stock Option
Plan having the same aggregate exercise price, terms, duration and
vesting schedule, but exercisable for a number of shares of Maxim
Common Stock equal to the Conversion Ratio for each share of Image
Common Stock covered by the ISO so deemed to be exchanged in
accordance with the terms of this Agreement; and
(ii) if such options are not ISO's, shall be deemed to have
surrendered such options at the Effective Time to Maxim in exchange
for a corresponding option (the "Corresponding Nonqualified Option")
to purchase shares of Maxim Common Stock having the same aggregate
exercise price, terms, duration and vesting schedule, but exercisable
for a number of shares of Maxim Common Stock equal to the Conversion
Ratio to each share of Image Common Stock covered by the option so
deemed to be exchanged in accordance with the terms of this Agreement
provided that with respect to options issued pursuant to that certain
Plan and Agreement of Conversion, dated July 30, 1993, among Image and
certain optionholders thereof (the "Conversion Agreement"), Maxim
shall also simultaneously assume the obligations of Image under the
Conversion Agreement to the optionholders parties to such Conversion
Agreement.
SECTION 3.2 Maxim to Make Certificates Available. (a) Maxim
shall authorize one or more bank or trust companies to act as Exchange Agent
hereunder (the "Exchange Agent"). Immediately following the Effective Time,
Maxim shall make available, and each holder of record of Image Common Stock
will be entitled to receive, upon surrender to the Exchange Agent of one or
more certificates representing such Image Common Stock for cancellation,
certificates representing the number of whole shares of Maxim Common Stock into
which such shares of Image Common Stock are convertible in the Merger. Neither
certificates nor scrip for fractional shares of Maxim Common Stock will be
issued, but each such holder otherwise entitled to receive a fractional share
shall have the right to receive cash in lieu thereof in an amount equal to the
proportional fractional share interest of one (1) share of Maxim Common Stock
to which he is entitled multiplied by the Maxim Share Value (the "fractional
share payment"). As used herein, the term "Maxim Share Value" shall mean the
average of the closing prices as reported on The Nasdaq National Market of one
share of Maxim Common Stock for the five trading days immediately preceding the
date on which the meeting of Image stockholders is held for the purpose of
approving this Agreement and the Merger. Maxim Common Stock into which Image
Common Stock shall be converted in the Merger shall be deemed to have been
issued at the Effective Time.
(b) Immediately following the Effective Time, the Exchange Agent
shall mail or otherwise deliver to each holder of record (other than Maxim, the
Subsidiary, any other Maxim subsidiary, Image or any wholly-owned subsidiary of
Image) of a certificate or certificates that
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immediately prior to the Effective Time represented outstanding Image Common
Stock (the "Certificates") (i) a form letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing Maxim Common Stock, such
letter and instructions to be in a form reasonably acceptable to the chief
executive officer of Image. Upon surrender of a Certificate for cancellation
to the Exchange Agent or to such other agent or agents as may be appointed by
Maxim, together with such letter of transmittal, duly executed, the holder of
record of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Maxim Common Stock into
which the shares of Image Common Stock theretofore represented by the
Certificate so surrendered shall have been converted pursuant to the provisions
of this Article III and a check for such holder's fractional share payment, if
any, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Image Common Stock that is not registered
on the transfer records of Image, certificates representing the proper number
of shares of Maxim Common Stock may be issued to a transferee if the
Certificate representing such Image Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by payment of any applicable stock transfer taxes.
(c) All Maxim Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Image Common
Stock.
SECTION 3.3 Dividends. No dividends or other distributions that
are declared after the Effective Time with respect to Maxim Common Stock and
payable to holders of record thereof after the Effective Time shall be paid to
Image stockholders entitled to receive certificates representing Maxim Common
Stock until such stockholders surrender their Certificates. Upon such
surrender, there shall be paid to the stockholder in whose name the
certificates representing such Maxim Common Stock shall be issued any dividends
which shall have become payable with respect to such Maxim Common Stock between
the Effective Time and the time of such surrender. After such surrender, there
shall also be paid to the stockholder in whose name the certificates
representing such Maxim Common Stock shall be issued any dividend on such Maxim
Common Stock that shall have a record date subsequent to the Effective Time and
prior to such surrender and a payment date after such surrender, and such
payment shall be made on the payment date. In no event shall the stockholders
entitled to receive such dividends be entitled to receive interest on such
dividends. All dividends or other distributions declared after the Effective
Time with respect to Maxim Common Stock and payable to the holders of record
thereof after the Effective Time that are payable to the holders of
Certificates not theretofore surrendered and exchanged for certificates
representing Maxim Common Stock pursuant to this Section 3.3 shall be paid or
delivered by Maxim to the Exchange Agent for the benefit of such holders. Any
dividends or other distributions held by the Exchange Agent for payment or
delivery to the holders of unsurrendered Certificates and unclaimed at the end
of one (1) year from the Effective Time shall be repaid or redelivered by the
Exchange Agent to Maxim, after which time any holder of Certificates who has
not theretofore surrendered such Certificates to the Exchange Agent, subject to
applicable law, shall look as a general creditor
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only to Maxim for payment or delivery of such dividends or distributions, as
the case may be. Notwithstanding the foregoing, none of Maxim, the Subsidiary,
the Exchange Agent, the Surviving Corporation or any other party hereto shall
be liable to a holder of Image Common Stock for any Maxim Common Stock or
dividends or distributions thereon delivered to a public official pursuant to
applicable escheat or unclaimed fund laws.
SECTION 3.4 Closing of Image Transfer Books. At the Effective
Time, the stock transfer books of Image shall be closed, and no transfer of
Image Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for certificates representing Maxim Common Stock as provided in
this Article III.
ARTICLE IV
Representations, Warranties and Certain Covenants of Maxim
Maxim represents, warrants and covenants to Image as follows:
SECTION 4.1 Organization and Qualification. Maxim and each of
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of organization and has the requisite
corporate power to carry on its business as it is now being conducted and to
own the properties and assets it now owns; is duly qualified or licensed to do
business as a foreign corporation in good standing in every jurisdiction where
the failure to be so qualified would have a material adverse effect on Maxim
and its subsidiaries taken as a whole; and has heretofore delivered to Image
complete and correct copies of its Certificate of Incorporation and Bylaws, as
currently in effect.
SECTION 4.2 Capitalization. The authorized capital stock of
Maxim consists of 15,000,000 shares of Maxim Common Stock and 5,000,000 shares
of Preferred Stock, $0.001 par value ("Maxim Preferred Stock"). As of May 29,
1996, 7,102,095 shares of Maxim Common Stock, and no shares of Maxim Preferred
Stock were validly issued and outstanding, fully paid and nonassessable, and
28,000 shares of Maxim Common Stock were validly issued and held by Maxim as
treasury shares. Except as set forth on Disclosure Schedule 4.2 attached
hereto, there are no options, warrants, or other rights, contracts,
commitments, understandings or arrangements outstanding or contemplated as of
the date of this Agreement obligating Maxim to issue shares of its capital
stock. As of the date of this Agreement, and at the Effective Time, there are
not and will not be any agreements for the purchase or acquisition by Maxim or
any of its subsidiaries of any shares of its capital stock or any obligation to
pay dividends on such shares or to redeem or retire such shares. All
outstanding stock, options, warrants, convertible notes and other securities of
Maxim and its subsidiaries have been issued in compliance with the registration
and prospectus delivery requirements of the Securities Act of 1933, as amended
or in compliance with applicable exemptions therefrom, and the registration and
qualification requirements of all applicable securities laws of states of the
United States and of any other applicable securities laws. Disclosure Schedule
4.2 sets forth a list of the subsidiaries of Maxim, and Maxim owns all the
issued and outstanding capital stock of each such subsidiary. Except as set
forth on Disclosure Schedule 4.2, Maxim has no subsidiaries, nor does it own,
directly or indirectly, any of the outstanding
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capital stock or securities convertible into capital stock of any corporation
or have any direct or indirect equity or ownership interest in any partnership,
joint venture or other business enterprise. Except as set forth in Disclosure
Schedule 4.2, neither Maxim nor any of its subsidiaries has granted or agreed
to grant any registration rights, including piggy-back rights, with respect to
its capital stock to any person or entity. Neither Maxim nor any of its
subsidiaries, nor to the knowledge of Maxim any shareholder of Maxim or any
subsidiary, has entered into any agreements concerning the voting of any shares
of its capital stock, or any agreements with respect to the election of
directors. The Maxim Common Stock to be issued to holders of Image Common
Stock at the Effective Time will be duly authorized and validly issued, fully
paid and nonassessable and will not be issued in violation of any preemptive
rights of any Maxim stockholders, and will be registered with the Commission
pursuant to an effective Registration Statement.
SECTION 4.3 Authorization. Maxim has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. Maxim's Board of Directors has duly authorized the
execution and delivery of this Agreement and, subject to obtaining the
necessary approval of stockholders of Maxim, the consummation of the
transactions contemplated hereby. Except for the approval of its stockholders,
no other corporate proceedings on the part of Maxim are necessary to authorize
this Agreement and the transactions contemplated hereby. Subject to the
foregoing, this Agreement has been duly executed and delivered, and constitutes
the valid and binding agreement of Maxim.
SECTION 4.4 No Violation. Subject to the exceptions set forth in
Section 4.5 hereof, neither the execution, delivery and performance of this
Agreement by Maxim and the Subsidiary nor the consummation of the transactions
contemplated hereby will constitute a breach or violation of (i) Maxim's or the
Subsidiary's Certificate of Incorporation or Bylaws, each as amended to date,
or (ii) any material agreement, instrument, license, franchise or permit to
which Maxim or the Subsidiary is subject or by which Maxim or the Subsidiary is
bound, other than any breaches or violations that, either singly or in the
aggregate, will not have a material adverse effect on Maxim and its
subsidiaries, taken as a whole, or (iii) any order, writ, injunction or decree
to which Maxim or the Subsidiary is subject or by which Maxim or the Subsidiary
is bound, other than any breaches or violations that, either singly or in the
aggregate, will not have a material adverse effect on Maxim and its
subsidiaries taken as a whole. Maxim is not, and the Subsidiary will not be,
subject to any law, rule or regulation of any governmental authority that would
be violated by the execution, delivery or performance by Maxim and the
Subsidiary of this Agreement and the consummation of the transactions
contemplated hereby.
SECTION 4.5 Governmental Authorities. Except as referred to
herein, or in connection or in compliance with the provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart Scott-Rodino
Act"), the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules of
The Nasdaq National Market ("Nasdaq-NMS"), the corporation laws and state
securities (or "blue sky") laws of the various states, and the filing and
recordation of appropriate merger documents as required by
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the laws of the State of Delaware, Maxim is not, and the Subsidiary will not
be, required to obtain the consent of, register with or submit any notice,
report or other filing with any governmental authority in connection with the
execution and delivery by Maxim and the Subsidiary of this Agreement or the
consummation of the transactions contemplated hereby, other than those that are
not material to Maxim and its subsidiaries taken as a whole.
SECTION 4.6 Reports and Financial Statements. Maxim has
previously furnished, or (to the extent not yet due under the terms of the
federal securities laws and the regulations thereunder) will furnish, Image
with a true and complete copy of Maxim's (i) Transition Report on Form 10-K for
the 10-month period ended January 31, 1996 and Annual Reports on Form 10-KSB
for each of the two (2) fiscal years in the period ended March 31, 1995, as
filed with the Securities and Exchange Commission (the "Commission"), (ii)
proxy statement and Annual Report to Stockholders relating to its Annual
Meeting of Stockholders on September 20, 1995 and any proxy statements relating
to any other meetings of its stockholders during 1994, 1995 and 1996, (iii) any
Quarterly Reports on Form 10-Q filed with the Commission subsequent to the date
hereof and prior to the Effective Time, (iv) Form S-3 Registration Statement
and related Prospectus, dated November 21, 1995, as filed with the Commission
and (v) all other reports or registration statements filed by Maxim with the
Commission during or with respect to Maxim's previous three (3) fiscal years or
transition period (as applicable). As of their respective dates, such reports
and statements did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Since January 31, 1996, there have been no material changes in
the business of Maxim as described in the Maxim Transition Report on Form 10-K
for the ten months ended January 31, 1996, filed with the Commission. The
consolidated financial statements of Maxim included in such reports and
separately furnished to Image by Maxim were prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
financial position of Maxim as at the dates thereof and the results of its
operations and changes in cash flow for the periods then ended, subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein.
SECTION 4.7 Absence of Certain Changes or Events. Except as set
forth in Disclosure Schedule 4.7 or otherwise contemplated by this Agreement,
or as described in the reports and financial statements provided as of the date
of this Agreement pursuant to Section 4.6, since January 31, 1996 there has not
been (a) any change in the business, results of operations, assets, financial
condition or prospects or in the manner of conducting the business of Maxim and
its subsidiaries considered as a whole which individually or in the aggregate
has had or is reasonably likely to have a material adverse effect on the
business, results of operations, assets, financial condition or prospects of
Maxim and its subsidiaries considered as a whole and, other than changes
occurring after the date hereof, none of which individually or in the aggregate
at the Effective Time will have had or is reasonably likely to have a material
adverse effect on the business,
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results of operations, assets, financial condition or prospects of Maxim and
its subsidiaries taken as a whole; (b) any damage to, or destruction or loss
of, the properties of Maxim or its subsidiaries, whether covered by insurance
or not, which has had or will have a material adverse effect on the business,
results of operations, assets, financial condition or prospects of Maxim and
its subsidiaries considered as a whole; (c) any declaration, setting aside or
payment of any dividend (whether in cash, stock or property) in respect of the
capital stock of Maxim or any redemption or other acquisition of such stock by
Maxim.
SECTION 4.8 Registration Statement; Proxy Statement. None of the
information to be supplied by Maxim or the Subsidiary for inclusion in (i) the
Registration Statement to be filed with the Commission by Maxim for the purpose
of registering the Maxim Common Stock to be issued in the Merger (the
"Registration Statement"), or (ii) the joint proxy statement to be distributed
in connection with the meeting of Image's stockholders and the meeting of Maxim
shareholders, respectively, to vote upon this Agreement and the Merger (the
"Proxy Statement") will, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the meeting of Image
stockholders to be held in connection with this Agreement and the Merger, and
at the Effective Time, or, in the case of the Registration Statement, at the
time it becomes effective, at the time of the meeting of Image stockholders,
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Registration Statement and Proxy Statement will comply as to
form in all material respects with the applicable provisions of the Securities
Act, the Exchange Act, and the applicable rules and regulations promulgated
thereunder, as well as any applicable blue sky laws (except that Maxim makes no
representations and warranties about information, including, but not limited to
financial information, contained in the Registration Statement and in the Proxy
Statement which has been supplied by Image).
SECTION 4.9 Brokers and Finders. Except for Prudential
Securities Incorporated ("Prudential") which is to receive a fee payable by
Maxim for financial advisory services related to the Merger, neither Maxim, nor
any of its affiliates, associates, officers, directors or employees has
employed any broker or finder or agreed to pay any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated hereby. A
true and complete copy of the engagement letter between Maxim and Prudential
with respect to the Merger (and if contained in a separate document, the fee
arrangement with respect thereto) is attached as Disclosure Schedule 4.9.
SECTION 4.10 Compliance with Law. Except as set forth on
Disclosure Schedule 4.10, (a) the business of Maxim and its subsidiaries has
not been and is not being conducted in violation of any statute, law,
ordinance, rule or regulation of any governmental entity applicable to it or
its business, properties or assets or by which it is bound, including, without
limitation, any law, ordinance, or regulation relating to the protection of the
environment or occupational health and safety, the noncompliance with which
would have a material adverse effect on the business of Maxim and its
subsidiaries, taken as a whole; (b) Maxim and its subsidiaries have all
permits, licenses, orders, approvals, authorizations, concessions and
franchises of any federal, state, local or foreign governmental or regulatory
body that are material to or necessary in the conduct of its business; (c) all
such permits, licenses, orders, approvals, concessions and franchises are in
full force and effect, and no proceeding is pending, or overtly threatened to
revoke or limit any of them; (d) neither Maxim nor its subsidiaries is in
violation of, or in default under, any term or provision of any
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judgment, order, writ, injunction or decree of any court or any federal, state,
territorial, municipal or other commission, board or other administrative or
government agency or authority to which it is subject or by which it is bound;
and (e) as of the date hereof, no investigation or review by any governmental
entity with respect to Maxim or its subsidiaries is pending or overtly
threatened, nor has any governmental entity indicated to Maxim an intention to
conduct the same.
SECTION 4.11 Litigation. (a) There is no suit, charge of
infringement, action or proceeding pending or, to the knowledge of Maxim,
threatened against or affecting Maxim which seeks to prevent the consummation
of the Merger or the transactions contemplated hereby; (b) there is no suit,
charge of infringement, action or proceeding (including those relating to
environmental matters) pending or, to the knowledge of Maxim, threatened
against or affecting Maxim or any of its subsidiaries, which, in the opinion of
Maxim, is reasonably likely to result in a judgment or decree having a material
adverse effect on the business, results of operations, assets, financial
condition or prospects of Maxim and its subsidiaries taken as a whole and which
has not been disclosed in the periodic reports filed by Maxim with the
Commission, (copies of which reports have heretofore been provided to Image for
its review); and (c) there is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against Maxim or any of its subsidiaries which has any
such effect and which has not been disclosed in the periodic reports filed by
Maxim with the Commission. Disclosure Schedule 4.11 summarizes all actions,
suits and proceedings of Maxim or its subsidiaries pending or, to the knowledge
of Maxim, threatened, as of the date hereof.
SECTION 4.12 Properties. Maxim or its applicable subsidiaries
have good and marketable title to all the properties and assets reflected as
owned in Maxim's January 31, 1996 audited financial statements, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements, or (ii) those which are not
material in amount and do not materially and adversely affect the use made and
proposed to be made of such property by Maxim and its subsidiaries. Maxim or
its applicable subsidiary holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation to
the business of Maxim and its subsidiaries taken as a whole. Maxim and its
subsidiaries own or lease all such properties as are necessary to their
operations as now conducted or as proposed to be conducted.
SECTION 4.13 Intellectual Property Rights. Maxim and its
subsidiaries have sufficient trademarks, trade names, patent rights, mask
works, copyrights, licenses, approvals and governmental authorizations to
conduct their businesses as now conducted; the expiration of any trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals or
governmental authorizations would not have a material adverse effect on the
business, results of operations or financial condition of Maxim and its
subsidiaries taken as a whole; and Maxim has no knowledge of any material
infringement by it or its subsidiaries of trademark, trade name rights, patent
rights, mask works, copyrights, licenses, trade secret or other similar rights
of others, and there is no claim being made against Maxim or its subsidiaries
regarding trademark, trade name, patent, mask work, copyright, license, trade
secret or other infringement which could have a material adverse effect on the
business, results of operations or financial condition of Maxim and its
subsidiaries.
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SECTION 4.14 Taxes. Except as set forth in Disclosure Schedule
4.14, Maxim has timely filed with the appropriate taxing authorities all
returns required to be filed in respect of all taxes of Maxim and its
subsidiaries, and has paid all such taxes, including interest, penalties and
additions in connection therewith shown to have become due on such returns or
for which a notice of assessment or demand for payment has been received.
Since January 31, 1996, no material tax liability has been assessed, proposed
to be assessed or accrued other than in the ordinary course of business, and no
material tax issues have been raised by the Internal Revenue Service in
connection with any of the tax returns referred to above, and no waivers of
statutes of limitations or extensions of time within which to file any tax
return or with respect to tax assessment or deficiency have been given or
requested with respect to Maxim or any of its subsidiaries.
SECTION 4.15 Executive Compensation and Benefits. Except as set
forth on Disclosure Schedule 4.15, Maxim's Transition Report on Form 10-K
for the ten-month period ended January 31, 1996 accurately describes all
material employment or consulting contracts or other arrangements for the
provision of benefits or compensation having a value in excess of $60,000 per
year for executive officers or former executive officers of Maxim and its
subsidiaries, and neither Maxim nor its subsidiaries have any commitment to
create any additional such contracts or arrangements or to amend any such
plans, contracts or arrangements so as to increase benefits thereunder. True
and complete copies of all such plans, contracts or arrangements have been
delivered to Image. Since January 31, 1996, there has not been any increase in
the compensation payable or to become payable by Maxim to its directors,
officers, key employees or consultants, or any adoption of or increase in any
bonus, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any directors, officers, employees, or
consultants except increases occurring in the ordinary course of business or
except as set forth in this Section 4.15 and on Disclosure Schedule 4.15.
SECTION 4.16 Compliance with ERISA. All employee benefit plans
(as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") maintained by Maxim or its
subsidiaries, and to the best of Maxim's knowledge those to which it
contributes, comply with the applicable provisions of ERISA in all material
respects and have so complied during all prior periods during which such
provisions were applicable; and Maxim has complied in all material respects
with the provisions of ERISA applicable to it as an employer, plan sponsor,
plan administrator or fiduciary of any such employee benefit plan. Except as
set forth on Disclosure Schedule 4.16, Maxim does not maintain any pension or
profit sharing plans or other benefit plans (within the meaning of Section 3(3)
of ERISA) and does not maintain any unfunded post-retirement medical or other
employee benefit plans. With respect to its employee benefit plans, Maxim has
made all contributions required of it by any law (including, without
limitation, ERISA) or contract. Maxim has maintained sufficient funding to
meet its obligations for all claims of current employees and retired or
inactive employees that may be filed for benefits under such plans up to and
including the Effective Time. The only employee benefit plans (as such term is
defined in Section 3(3) of ERISA) maintained by Maxim or to which Maxim has
contributed since August of 1993 are disclosed on Disclosure Schedule 4.16, and
each such employee benefit plan has made a timely
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filing of Form 5500 for each year that such plan has been in existence. Maxim
has not incurred any liability under Title IV of ERISA.
SECTION 4.17 Environmental Matters. Except as set forth on
Disclosure Schedule 4.17:
(a) (i) Maxim and each of its subsidiaries holds and is in
substantial compliance with all environmental permits, certificates, licenses,
approvals, registrations and authorizations ("Environmental Permits") required
under all laws, rules and regulations in connection with their respective
businesses and all such Environmental Permits are currently in effect, and (ii)
Maxim has substantially complied with all, and is not in violation of any,
applicable environmental statutes, rules, regulations, ordinances and orders of
any governmental entity, including those relating to Hazardous Substances as
defined below.
(b) Maxim has made timely applications for renewals of all such
Environmental Permits that are scheduled to expire by December 31, 1996, except
for such Environmental Permits for which by their terms or by operation of law,
application for renewal need not be made more than 90 days before their
expiration.
(c) Maxim has received no notice that any notice, citation,
summons, order or consent decree has been issued, complaint filed, penalty
assessed, or that any investigation or review is pending or, to the best of
Maxim's knowledge, has been threatened by any governmental or other entity (i)
with respect to any alleged violation by Maxim or its subsidiaries of any
environmental statute, ordinance, rule, regulation or other of any governmental
entity, (ii) with respect to any alleged failure by Maxim or its subsidiaries
to have any Environmental Permit, certificate, license, approval registration
or authorization required in connection with their respective businesses, or
(iii) with respect to any generation, use, possession, treatment, storage,
recycling, transportation or disposal (collectively "management" and as sued in
verb form, "manage") of any hazardous or toxic substance or waste, including
petroleum products and radioactive materials ("Hazardous Substances") by Maxim
or its subsidiaries.
(d) Maxim has not received any request for information, notice of
claim, demand or notification that it or any of its subsidiaries is or may be
potentially responsible under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"), or any similar
law of any governmental entity with respect to any investigation or clean-up of
any threatened or actual release of any Hazardous Substance.
(e) Except as set forth on Disclosure Schedule 4.17, to the best
of Maxim's knowledge, no polychlorinated biphenyls ("PCBs") or
asbestos-containing materials are or have been present at any property now or
previously owned, operated or leased by Maxim or its subsidiaries. Except as
set forth on Disclosure Schedule 4.17, there are no underground storage tanks,
active or abandoned, or above-ground storage tanks or lagoons or surface
impoundments at any property now owned by Maxim or its subsidiaries, or to the
knowledge of Maxim, at any property now operated or leased by Maxim or its
subsidiaries.
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(f) To the best of Maxim's knowledge, no Hazardous Substance
managed by Maxim or its subsidiaries has come to be located at any site which
is listed or proposed for listing under CERCLA, CERCLIS or on any similar state
list, or which is the subject of federal, state or local enforcement actions or
other investigations which may lead to claims against Maxim for clean-up costs,
remedial work, damages to natural resources or for personal injury claims,
including, but not limited to, claims under CERCLA.
(g) There are no environmental liens on any properties owned by
Maxim or its subsidiaries or to the knowledge of Maxim, on any property leased
by Maxim or its subsidiaries, and no government actions have been taken or are
in the process or pending which would subject any of such properties to such
liens.
(h) Except as listed on Disclosure Schedule 4.17 and heretofore
provided to Image, there have been no environmental inspections,
investigations, studies, audits, tests, reviews or other analyses conducted in
relation to any property or business now or previously owned, operated, or
leased by Maxim or its subsidiaries.
(i) There are no actions, suits, claims, arbitration proceedings,
or complaints pending or, to the knowledge of Maxim, threatened or under
consideration by any governmental entity, community, citizen or other entity
against Image or any of its subsidiaries relating to environmental protection
with respect to or affecting its or their properties or assets, nor does Maxim
have reason to believe that any such actions, suits, claims, or complaints will
be brought against it.
SECTION 4.18 Absence of Undisclosed Liabilities. Except as and to
the extent reflected or reserved against in the January 31, 1996 audited
consolidated balance sheet of Maxim, at January 31, 1996, Maxim did not have
any material liability or obligation, whether accrued, absolute, known or
unknown, contingent or otherwise. Except as set forth on Disclosure Schedule
4.18, since January 31, 1996, Maxim has not incurred any liability except in
the ordinary course of its business and except in connection with the
transactions contemplated hereby; and no such liability incurred by Maxim in
the ordinary course of its business has been or will prove to be materially
adverse to the business, financial condition, results of operations or
prospects of Maxim and its subsidiaries considered as a whole.
SECTION 4.19 Fairness Opinion. Maxim has received from Prudential
oral advice as of the date hereof, and expects to receive from Prudential a
written opinion, satisfactory to Maxim, dated no later than five business days
following the date of execution of this Agreement by Image and Maxim, to the
effect that the consideration to be paid by Maxim hereunder is fair to the
stockholders of Maxim as well as Prudential's consent to the inclusion of such
opinion in the Registration Statement and Proxy Statement (and will provide a
true and complete copy of such opinion and consent to Image).
SECTION 4.20 Statutory Provisions; Appraisal Rights. None of the
provisions of Sections 144 or 203 of the Delaware General Corporation Law apply
to this Agreement, the Certificate of Merger, the Merger or to the transactions
contemplated hereby. The entry into and performance by
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Maxim of this Agreement and consummation of the transactions contemplated
hereby will not give rise to appraisal rights or dissenters rights in favor of
any holder of shares of Maxim Common Stock (or any holder of any option,
warrant or other right to acquire shares of Maxim Common Stock), whether
pursuant to the terms of Section 262 of the Delaware General Corporation Law or
pursuant to the terms of the Certificate of Incorporation or By-Laws of Maxim
or of any shareholders agreement or other contract, agreement or instrument to
which Image is a party or by which it is bound.
SECTION 4.21 Vote. The affirmative vote of a majority of the
votes that holders of the outstanding shares of Maxim Common Stock are entitled
to cast is the only vote the holders of Maxim's capital stock necessary to
approve this Agreement and the Certificate of Merger and the transactions
contemplated hereby and thereby.
SECTION 4.22 Contracts. (a) Except as set forth in Disclosure
Schedule 4.22, neither Maxim nor any of its subsidiaries is a party to or bound
by any written contract, commitment or arrangement (i) for the employment of
any executive officer of Maxim; (ii) with any labor union; (iii) for the
purchase of materials, supplies or equipment in excess of its requirements for
normal operating inventories; (iv) except to the extent so provided in its
standard franchise agreements with its franchisees, in the nature of a
confidentiality agreement, royalty or license or an agreement for the
acquisition of intangible property rights that is material to the conduct of
the business of Maxim and its subsidiaries; (v) with a governmental agency (or
subcontractor) other than agreements for the sale of standard products; (vi)
for the purchase of products from a single-source supplier; (vii) in the nature
of a non-competition agreement which in any way restricts the right of Maxim
and its subsidiaries to conduct business; (viii) in the nature of a management
agreement; (ix) except to the extent so provided in its standard franchise
agreements with its franchisees, for any quantity discount, volume purchase,
rebate or bill back sales arrangement that will continue after the Effective
Time and is material to the conduct of the business of Maxim and its
subsidiaries; (x) except to the extent so provided in its standard franchise
agreements with its franchisees, which is not in the ordinary course of
business and cannot be performed within one (1) calendar year; (xi) which
is not in the ordinary course of business and provides for future aggregate
annual payments by Maxim and its subsidiaries or a fixed price to be paid by
Maxim and its subsidiaries of more than $100,000; (xii) except to the extent so
provided in its standard franchise agreements with its franchisees, which
provides for the sale of Maxim products at a sale price aggregating more than
$100,000; (xiii) except to the extent so provided in its standard franchise
agreements with its franchisees, which provides for the distribution or sale of
Maxim products by a distributor, dealer or sales representatives; or (xiv) not
the ordinary course of business.
(b) Neither Maxim nor any of its subsidiaries is in violation of,
or in default under, any term or provision of (i) its Certificate of
Incorporation or its Bylaws; (ii) any loan agreement or other debt instrument;
or (iii) in any material respect, any other material contract, agreement or
instrument to which it is a party or by which it is bound. No other party to
any material contract with Maxim or its subsidiaries is known by Maxim to be in
default or breach thereof in any material respect.
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ARTICLE V
Representations, Warranties and Certain Covenants of Image
Image represents, warrants and covenants to Maxim as follows:
SECTION 5.1 Organization and Qualification. Image is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to carry on
its business as it is now being conducted and to own the properties and assets
it now owns; is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction where the failure to be so
qualified would have a material adverse effect on Image; and has heretofore
delivered to Maxim complete and correct copies of its Certificate of
Incorporation and Bylaws, as currently in effect.
SECTION 5.2 Capitalization. As of the date of this Agreement,
the authorized capital stock of Image consists of 20,000,000 shares of Image
Common Stock and 10,000,000 shares of $0.01 par value Preferred Stock ("Image
Preferred Stock"). As of May 30, 1996, 5,249,697 shares of Image Common Stock
were issued and outstanding, no shares of Image Preferred Stock were issued and
outstanding, and no shares were held in treasury. All issued and outstanding
shares of Image Common Stock are validly issued, fully paid and nonassessable.
Except as disclosed on Disclosure Schedule 5.2 hereof, there are no outstanding
options, warrants, rights, contracts, commitments, understandings or
arrangements by which Image is bound to issue any additional shares of its
capital stock. As of the date of this Agreement, and at the Effective Time,
there are not, and will not be any agreements for the purchase or acquisition
by Image of any shares of its capital stock or any obligation to pay dividends
on such shares or to redeem or retire such shares. Except as set forth on
Disclosure Schedule 5.2, Image has not granted nor agreed to grant any
registration rights, including piggy-back rights with respect to its capital
stock to any person or entity. Neither Image, nor to the knowledge of Image
any shareholder of Image, has entered into any agreements concerning the voting
of any shares of its capital stock or any agreements with respect to election
of directors.
SECTION 5.4 Subsidiaries. Except as set forth on Disclosure
Schedule 5.3, Image has no subsidiaries, nor does it own, directly or
indirectly, any of the outstanding capital stock or securities convertible into
capital stock of any corporation or have any direct or indirect equity or
ownership interest in any partnership, joint venture or other business
enterprise.
A.Authorization. Image has full corporate power and authority to
enter into this Agreement and, subject to obtaining the necessary approval of
stockholders of Image, to carry out the transactions contemplated hereby.
Image's Board of Directors has duly authorized the execution and delivery of
this Agreement and, subject to obtaining the necessary approval of stockholders
of Image, the consummation of the transactions contemplated hereby. Except for
the approval of its stockholders, no other corporate proceedings on the part of
Image are necessary to authorize this Agreement and the transactions
contemplated hereby. Subject to the foregoing, this
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Agreement has been duly executed and delivered, and constitutes the valid and
binding agreement of Image.
SECTION 5.5 No Violation. Except as set forth on Disclosure
Schedule 5.5, subject to the exceptions set forth in Section 5.6 hereof,
neither the execution, delivery and performance of this Agreement by Image nor
the consummation of the transactions contemplated hereby will constitute a
breach or violation of (i) Image's Certificate of Incorporation or Bylaws, or
(ii) any material agreement, instrument, license, franchise or permit to which
Image is subject or by which Image is bound, or (iii) any order, writ,
injunction or decree to which Image is subject or by which Image is bound,
other than any breaches or violations that, either singly or in the aggregate,
will not have a material adverse effect on Image. To the best of Image's
knowledge, Image is not subject to any law, rule or regulation of any
governmental authority that would be violated by the execution, delivery or
performance by Image of this Agreement and the consummation of the transactions
contemplated hereby.
SECTION 5.6 Governmental Authorities. Except as referred to
herein, or in connection or in compliance with the Hart-Scott-Rodino Act, the
Securities Act, the Exchange Act, the rules of the NASDAQ-NMS, the corporation
laws and state securities or blue sky laws of the various states and the filing
and recordation of appropriate merger documents as required by the laws of the
State of Delaware, Image is not required to submit any notice, report or other
filing to any governmental authority in connection with the execution and
delivery by Image of this Agreement or the consummation of the transactions
contemplated hereby, other than those that are not material to Image.
SECTION 5.7 Reports and Financial Statements. Image has
previously furnished, or (to the extent not yet due under the terms of the
federal securities laws and the regulations thereunder as of the date hereof)
will furnish Maxim with true and complete copies of Image's (i) Annual Reports
on Form 10-K for each of the two fiscal years in the period ended July 1, 1995,
as filed with the Commission, (ii) proxy statements relating to all meetings of
its stockholders (whether annual or special) during fiscal years 1994, 1995 and
1996, (iii) Quarterly Reports on Form 10-Q for each of the first three quarters
in the fiscal year ending June 29, 1996, as filed with the Commission, and any
subsequent Quarterly Reports on Form 10-Q filed by Image prior to the Effective
Time, and (iv) all other reports or registration statements filed by Image with
the Commission during or with respect to Image's previous three (3) fiscal
years. As of their respective dates, such reports and statements did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Since July 1, 1995, there have been no material changes in the business of
Image as described in the Image Annual Report on Form 10-K for the fiscal year
ended July 1, 1995, filed with the Commission, other than as disclosed in the
Image Quarterly Reports on Form 10-Q for the first three quarters in the fiscal
year ending June 29, 1996, as filed with the Commission. The financial
statements of Image included in such reports and separately furnished to Maxim
by Image have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and fairly present the financial position of Image as at
the dates thereof and the results
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of its operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments and any other adjustments described therein.
SECTION 5.8 Absence of Certain Changes or Events. Except as
contemplated or permitted by this Agreement, or as set forth on Disclosure
Schedule 5.8, or as described in the reports and financial statements provided
as of the date of this Agreement pursuant to Section 5.7, since March 30, 1996,
there has not been (a) any change in the business, results of operations,
assets, financial condition or prospects or in the manner of conducting the
business of Image other than changes in the ordinary course of business, none
of which individually or in the aggregate have had or is reasonably likely to
have a material adverse effect on the business, results of operations, assets,
financial condition or prospects of Image and other than changes occurring
after the date hereof, none of which individually or in the aggregate at the
Effective Time will have had or is reasonably likely to have a material adverse
effect on the business, results of operations, assets, financial condition or
prospects of Image; (b) any damage to, or destruction or loss of, the
properties of Image, whether covered by insurance or not, which has had or will
have a material adverse effect on the business, results of operations, assets,
financial condition or prospects of Image; or (c) any declaration, setting
aside or payment of any dividend (whether in cash, stock or property) in
respect of the capital stock of Image or any redemption or other acquisition of
Image Common Stock by Image.
SECTION 5.9 Registration Statement; Proxy Statement. None of the
information supplied by Image for inclusion in the Proxy Statement or the
Registration Statement will, in the case of the Proxy Statement or any
amendments thereof or supplements thereto, at the time of the meeting of the
Image stockholders to be held in connection with the Merger, and at the
Effective Time, or, in the case of the Registration Statement, at the time it
becomes effective, at the time of the meeting of Image stockholders, and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder, as well as any applicable blue sky laws (except that Image makes no
representations and warranties about information, including, but not limited
to, financial information contained in the Registration Statement and in the
Proxy Statement which has been supplied by Maxim).
SECTION 5.10 Brokers and Finders. Except with respect to the fees
and expenses to The Robinson-Humphrey Company, Inc. (the "Financial Advisor")
paid for financial advisory services related to the Merger, neither Image, any
subsidiary of Image nor any of their officers or directors has employed any
broker or finder or incurred any liability for any financial advisory,
brokerage or finder's fee or commissions in connection with the transactions
contemplated herein. A true and complete copy of the engagement letter between
Image and the Financial Advisor with respect to the Merger (and if contained in
a separate document, the fee arrangement with respect thereto) is attached as
Disclosure Schedule 5.10.
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SECTION 5.11 Compliance with Law. Except as set forth on
Disclosure Schedule 5.11, (a) the business of Image has not been and is not
being conducted in violation of any statute, law, ordinance, rule or regulation
of any governmental entity applicable to it or its business, properties or
assets or by which it is bound, including, without limitation, any law,
ordinance, or regulation relating to the protection of the environment or
occupational health and safety, the noncompliance with which would have a
material adverse effect on the business of Image; (b) Image has all permits,
licenses, orders, approvals, authorizations, concessions and franchises of any
federal, state, local or foreign governmental or regulatory body that are
material to or necessary in the conduct of its business; (c) all such permits,
licenses, orders, approvals, concessions and franchises are in full force and
effect, and no proceeding is pending, or overtly threatened to revoke or limit
any of them; (d) Image is not in violation of, or in default under, any term or
provision of any judgment, order, writ, injunction or decree of any court or
any federal, state, territorial, municipal or other commission, board or other
administrative or government agency or authority to which it is subject or by
which it is bound; and (e) as of the date hereof, no investigation or review by
any governmental entity with respect to Image is pending or overtly threatened,
nor has any governmental entity indicated to Image an intention to conduct the
same.
SECTION 5.12 Properties. Image has good and marketable title to
all the properties and assets reflected as owned in the March 31, 1996
unaudited balance sheet of Image, subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except (i) those, if any, reflected in such
financial statements, or (ii) those which are not material in amount and do not
materially and adversely affect the use made and proposed to be made of such
property by Image. Image holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation to
the business of Image. Image owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be conducted.
SECTION 5.13 Intellectual Property Rights. Image has sufficient
trademarks, trade names, patent rights, mask works, copyrights, licenses,
approvals and governmental authorizations to conduct its business as now
conducted; the expiration of any trademarks, trade names, patent rights, mask
works, copyrights, licenses, approvals or governmental authorizations would not
have a material adverse effect on the business, results of operations or
financial condition of Image and Image has no knowledge of any material
infringement by it of trademark, trade name rights, patent rights, mask works,
copyrights, licenses, trade secret or other similar rights of others, and there
is no claim being made against Image regarding trademark, trade name, patent,
mask work, copyright, license, trade secret or other infringement which could
have a material adverse effect on the business, results of operations or
financial condition of Image.
SECTION 5.14 Litigation. (a) There is no suit, charge of
infringement, action or proceeding pending or, to the knowledge of Image,
threatened against or affecting Image which seeks to prevent the consummation
of the Merger or the transactions contemplated hereby; (b) there is no suit,
charge of infringement, action or proceeding (including those relating to
environmental matters) pending or, to the knowledge of Image, threatened
against or affecting Image, which, in the opinion of Image, is reasonably
likely to result in a judgment or decree having a material adverse effect on
the business, results of operations, assets, financial condition or prospects
of Image and
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which has not been disclosed in the periodic reports filed by Image with the
Commission, (copies of which reports have heretofore been made available to
Maxim for its review); and (c) there is no judgment, decree, injunction, rule
or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Image which has any such
effect. Disclosure Schedule 5.14 summarizes all actions, suits and proceedings
of Image pending, or to the knowledge of Image threatened, as of the date
hereof.
SECTION 5.5 Taxes. Except as set forth in Disclosure Schedule
5.15, Image has timely filed with the appropriate taxing authorities all
returns required to be filed in respect of all taxes of Image and its
subsidiaries, and has paid all such taxes, including interest, penalties and
additions in connection therewith shown to have become due on such returns or
for which a notice of assessment or demand for payment has been received.
Since March 30, 1996, no material tax liability has been assessed, proposed to
be assessed or accrued other than in the ordinary course of business, and no
material tax issues have been raised by the Internal Revenue Service in
connection with any of the tax returns referred to above, and no waivers of
statutes of limitations or extensions of time within which to file any tax
return or with respect to a tax assessment or deficiency have been given or
requested with respect to Image or any of its subsidiaries.
SECTION 5.16 Executive Compensation and Benefits. Except as set
forth on Disclosure Schedule 5.16, Image's Proxy Statement for the 1995 Annual
Meeting of Shareholders of Image held on November 15, 1995 accurately describes
all material employment or consulting contracts or other arrangements as of
such date for the provision of benefits or compensation having a value in
excess of $60,000 per year for executive officers or former executive officers
of Image and its subsidiaries, and neither Image nor its subsidiaries have any
commitment to create any additional such contracts or arrangements or to amend
any such plans, contracts or arrangements so as to increase benefits
thereunder. True and complete copies of all such plans, contracts or
arrangements have been delivered to Maxim. Since July 1, 1995, there has not
been any increase in the compensation payable or to become payable by Image to
its directors, officers, key employees or consultants, or any adoption of or
increase in any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any directors, officers, employees,
or consultants except increases occurring in the ordinary course of business or
except as set forth in this Section 5.16 and on Disclosure Schedule 5.16.
SECTION 5.17 Compliance with ERISA. All employee benefit plans
(as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") maintained by Image or its
subsidiaries, and to the best of Image's knowledge those to which it
contributes, comply with the applicable provisions of ERISA in all material
respects and have so complied during all prior periods during which such
provisions were applicable; and Image has complied in all material respects
with the provisions of ERISA applicable to it as an employer, plan sponsor,
plan administrator or fiduciary of any such employee benefit plan. Except as
set forth on Disclosure Schedule 5.17, Image does not maintain any pension or
profit sharing plans or other benefit plans (within the meaning of Section 3(3)
of ERISA) and does not maintain any unfunded post-retirement medical or other
employee benefit plans. With respect to its employee benefit plans, Image has
made all contributions required of it by any law (including, without
limitation, ERISA)
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or contract. Image has maintained sufficient funding to meet its obligations
for all claims of current employees and retired or inactive employees that may
be filed for benefits under such plans up to and including the Effective Time.
The only employee benefit plans (as such term is defined in Section 3(3) of
ERISA) maintained by Image or to which Image has contributed since August of
1993 are disclosed on Disclosure Schedule 5.17, and each such employee benefit
plan has made a timely filing of Form 5500 for each year that such plan has
been in existence. Image has not incurred any liability under Title IV of
ERISA.
SECTION 5.18 Environmental Matters. Except as set forth on
Disclosure Schedule 5.18:
(a) (i) Image and each of its subsidiaries holds and is in
substantial compliance with all environmental permits, certificates, licenses,
approvals, registrations and authorizations ("Environmental Permits") required
under all laws, rules and regulations in connection with their respective
businesses and all of such Environmental Permits are currently in effect, and
(ii) Image has substantially complied with all, and is not in violation of any,
applicable environmental statutes, rules, regulations, ordinances and orders of
any governmental entity, including those relating to Hazardous Substances.
(b) Image has made timely applications for renewals of all such
Environmental Permits that are scheduled to expire by December 31, 1996, except
for such Environmental Permits for which by their terms or by operation of law,
application for renewal need not be made more than 90 days before their
expiration.
(c) Image has received no notice that any notice, citation,
summons, order or consent decree has been issued, complaint filed, penalty
assessed, or that any investigation or review is pending or, to the best of
Image's knowledge, has been threatened by any governmental or other entity (i)
with respect to any alleged violation by Image or its subsidiaries of any
environmental statute, ordinance, rule, regulation or order of any governmental
entity, (ii) with respect to any alleged failure by Image or its subsidiaries
to have any Environmental Permit, certificate, license, approval, registration
or authorization required in connection with their respective businesses, or
(iii) with respect to any generation, use, possession, treatment, storage,
recycling, transportation or disposal (collectively "management" and as used in
verb form, "manage") of any Hazardous Substances by Image or its subsidiaries.
(d) Image has not received any request for information, notice of
claim, demand or notification that it or any of its subsidiaries is or may be
potentially responsible under CERCLA, or any similar law of any governmental
entity with respect to any investigation or clean-up of any threatened or
actual release of any Hazardous Substance.
(e) Except as set forth on Disclosure Schedule 5.18, to the best
of Image's knowledge, no PCBs or asbestos-containing materials are or have
been present at any property now or previously owned, operated or leased by
Image or its subsidiaries. Except as set forth on Disclosure Schedule 5.18,
there are no underground storage tanks, active or abandoned, or above-ground
storage tanks
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or lagoons or surface impoundments at any property now owned by Image or to the
knowledge of Image at any property now leased or operated by Image.
(f) To the best of Image's knowledge, no Hazardous Substance
managed by Image or its subsidiaries has come to be located at any site which
is listed or proposed for listing under CERCLA, CERCLIS or on any similar state
list, or which is the subject of federal, state or local enforcement actions or
other investigations which may lead to claims against Image or the Surviving
Corporation for clean-up costs, remedial work, damages to natural resources or
for personal injury claims, including, but not limited to, claims under CERCLA.
(g) There are no environmental liens on any properties owned by
Image or to the knowledge of Image on any property leased by Image, and no
government actions have been taken or are in the process or pending which would
subject any of such properties to such liens.
(h) Except as listed on Disclosure Schedule 5.18 and heretofore
provided to Maxim, there have been no environmental inspections,
investigations, studies, audits, tests, reviews or other analyses conducted in
relation to any property or business now or previously owned, operated, or
leased by Image or its subsidiaries.
(i) There are no actions, suits, claims, arbitration proceedings,
or complaints pending or, to the knowledge of Image, threatened or under
consideration by any governmental entity, community, citizen or other entity
against Image or any of its subsidiaries relating to environmental protection
with respect to or affecting its or their properties or assets, nor does Image
have reason to believe that any such actions, suits, claims, or complaints will
be brought against it.
SECTION 5.19 Absence of Undisclosed Liabilities. Except as and to
the extent reflected or reserved against in the March 30, 1996 unaudited
balance sheet of Image, and subject to such year-end adjustments as would be
appropriate if such date were the end of Image's fiscal year, at March 30,
1996, Image did not have any material liability or obligation, whether accrued,
absolute, known or unknown, contingent or otherwise. Except as set forth on
Disclosure Schedule 5.19, since March 30, 1996, Image has not incurred any
liability except in the ordinary course of its business and except in
connection with the transactions contemplated hereby; and no such liability
incurred by Image in the ordinary course of its business has been or will be
materially adverse to the business or financial condition of Image.
SECTION 5.20 Fairness Opinion. Image has received from the
Financial Advisor oral advice as of the date hereof, and expects to receive
from the Financial Advisor a written opinion, satisfactory to Image, dated no
later than five business days following the date of execution of this Agreement
by Image and Maxim, to the effect that the consideration to be received by the
stockholders of Image hereunder is fair to the stockholders of Image as well as
the Financial Advisor's consent to the inclusion of such opinion in the Proxy
Statement (and will provide a true and complete copy of such opinion and
consent to Maxim).
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SECTION 5.21 Statutory Provisions; Appraisal Rights. None of the
provisions of Sections 144 or 203 of the Delaware General Corporation Law apply
to this Agreement, the Certificate of Merger, the Merger or to the transactions
contemplated hereby. The entry into and performance by Image of this Agreement
and consummation of the transactions contemplated hereby will not give rise to
appraisal rights or dissenters rights in favor of any holder of shares of Image
Common Stock (or any holder of any option, warrant or other right to acquire
shares of Image Common Stock), whether pursuant to the terms of Section 262 of
the Delaware General Corporation Law or pursuant to the terms of the
Certificate of Incorporation or By-Laws of Image or of any shareholders
agreement or other contract, agreement or instrument to which Image is a party
or by which it is bound.
SECTION 5.22 Vote. The affirmative vote of a majority of the
votes that holders of the outstanding shares of Image Common Stock are entitled
to cast is the only vote the holders of Image's capital stock necessary to
approve this Agreement and the Certificate of Merger and the transactions
contemplated hereby and thereby.
SECTION 5.23 Capital Expenditure Plan. Image has previously
delivered to Maxim a true, complete and correct copy, certified as such by the
chief executive officer of Image, of Image's 1997 Capital Expenditure Plan (the
"Capital Expenditure Plan") as adopted by the Board of Directors of Image and
as presently implemented and in effect, as well as all additional financial
data and other information necessary to explain the manner, extent and degree
of Image's implementation of such Capital Expenditure Plan to the date hereof,
as well as the anticipated implementation of such plan to the anticipated date
of, and subsequent to, the Effective Time.
SECTION 5.24 Contracts. (a) Except as set forth in Disclosure
Schedule 5.24, Image is not a party to or bound by any written contract,
commitment or arrangement (i) for the employment of any executive officer; (ii)
with any labor union; (iii) for the purchase of materials, supplies or
equipment in excess of its requirements for normal operating inventories; (iv)
in the nature of a confidentiality agreement, royalty or license or an
agreement for the acquisition of intangible property rights that is material to
the conduct of the business of Image; (v) with a governmental agency (or
subcontractor) other than agreements for the sale of standard products; (vi)
for the purchase of products from a single-source supplier; (vii) in the nature
of a non-competition agreement which in any way restricts the right of Image to
conduct business; (viii) in the nature of a management agreement; (ix) for any
quantity discount, volume purchase, rebate or bill back sales arrangement that
will continue after the Effective Time and is material to the conduct of the
business of Image; (x) which is not in the ordinary course of business and
cannot be performed within one (1) calendar year; (xi) which is not in the
ordinary course of business and provides for future aggregate annual payments
by Image or a fixed price to be paid by Image of more than $100,000; (xii)
which provides for the sale of Image products at a sale price aggregating more
than $100,000; (xiii) which provides for the distribution or sale of Image
products by a distributor, dealer or sales representatives; or (xiv) not the
ordinary course of business.
(b) Image is not in violation of, or in default under, any term or
provision of (i) its Certificate of Incorporation or its Bylaws; (ii) any loan
agreement or other debt instrument; or (iii)
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in any material respect, any other material contract, agreement or instrument
to which it is a party or by which it is bound. No other party to any material
contract with Image is known by Image to be in default or breach thereof in any
material respect.
ARTICLE VI
Representations and Warranties Regarding the Subsidiary
Maxim and the Subsidiary represent and warrant to Image as follows:
SECTION 6.1 Organization. The Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is a wholly owned subsidiary of Maxim. Subsidiary has not and, at
the Effective Time, the Subsidiary will not have engaged directly or through
any predecessor or subsidiary in any business or activities of any type or kind
whatever or entered into any agreements or arrangements with any person or
entity and will not be subject to or bound by any obligation or undertaking
which is not contemplated by this Agreement or referred to in the Proxy
Statement.
SECTION 6.2 Capitalization. The authorized capital stock of the
Subsidiary will consist of 100 shares of Common Stock, $.01 par value, all of
which have been validly issued and outstanding, fully paid and nonassessable
and are owned by Maxim free and clear of all liens, claims and encumbrances.
SECTION 6.3 Authority Relative to this Agreement. The Subsidiary
has full corporate power and authority to carry out the transactions
contemplated hereby. The consummation of the transactions contemplated hereby
have been duly authorized by Subsidiary's Board of Directors and approved by
Maxim as its sole stockholder, and no other corporate proceedings on the part
of the Subsidiary are necessary to authorize the transactions contemplated
hereby.
ARTICLE VII
Covenants
SECTION 7.1 Covenants of Image. During the period commencing on
the date hereof and continuing until the Effective Time, Image agrees (except
as expressly contemplated by this Agreement or to the extent that Maxim shall
otherwise consent in writing) that:
(a) Image will carry on its businesses in, and only in, the
regular and ordinary course in substantially the same manner as heretofore
conducted, use its best efforts to preserve and protect the businesses, rights,
properties and assets of Image and, to the extent consistent with such
businesses, use its best efforts to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it. Image agrees that from and after the date
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hereof, through the Effective Time, Image will not, without the prior consent
of Maxim, (i) amend its Certificate of Incorporation or Bylaws, except as
contemplated by this Agreement, (ii) terminate or amend in any manner which
would directly or indirectly materially change the benefits under any employee
benefit plan, fund or arrangement, (iii) mortgage, pledge or subject to lien,
restriction or other encumbrance any of the material property, business or
assets, tangible or intangible, of Image, except in the ordinary course of its
business as presently conducted, (iv) sell, transfer, lease or otherwise
dispose of assets, except in the ordinary course of its business as presently
conducted, or (v) make any change in accounting method or annual accounting
period.
(b) Image will use its best efforts to comply promptly with all
requirements that federal or state law may impose on Image with respect to the
Merger and promptly cooperate with and furnish information to Maxim in
connection with any such requirements imposed upon Maxim or on the Subsidiary
in connection with the Merger.
(c) Image will use its best efforts to obtain (and cooperate with
Maxim in obtaining) at the earliest practicable date and prior to the Effective
Time, any consent, authorization or approval of, or any exemption by, any
governmental authority or agency, or material third party, required to be
obtained or made by Image (or by Maxim) in connection with the Merger or the
taking of any action necessary to the transactions contemplated hereby or
thereby.
(d) Image will afford to Maxim and to Maxim's accountants, counsel
and other representatives, full access, during normal business hours during the
period prior to the Effective Time or the earlier termination of this
Agreement, to all of its properties, books, contracts, commitments and records
(including, with the consent of such auditors, which consent Image shall use
its best efforts to obtain, the working papers of the independent auditors in
connection with their audits or other services performed for Image) and, during
such period, Image shall furnish promptly to Maxim (i) a copy of each report,
schedule and other document filed or received by it during such period pursuant
to the requirements of federal and state securities laws; and (ii) all other
information concerning its business, properties and personnel as Maxim may
reasonably request. Such investigation shall not affect the representations
and warranties of Image contained or provided for herein.
(e) Image will promptly advise Maxim orally and in writing of any
change in the business, results of operations, financial condition, assets,
liabilities or prospects of Image that is or may be materially adverse to
Image. Image will promptly advise Maxim if, at any time before the
Registration Statement becomes effective or the Effective Time, the
Registration Statement or the Proxy Statement, as the same relate to Image,
contains an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading. In such event, Image will promptly provide Maxim with the
information needed to correct such misstatement or omission.
(f) If any action, suit, proceeding or investigation of the nature
specified in Sections 9.1(c) and 9.2(c) hereof is commenced before the
Effective Time, Image agrees to cooperate with
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Maxim and the Subsidiary and to use its best efforts to defend against the same
and respond thereto, unless the Board of Directors of Image has made the
determination, pursuant to Section 9.2(c) hereof, in its good faith judgment,
that it is not in the best interests of the shareholders of Image to contest
such action, in which event prompt written notice of such determination shall
be delivered to Maxim.
(g) Except as set forth in Section 5.2, there will be no
outstanding options, warrants, rights, contracts, commitments, understandings
or arrangements by which Image is bound to issue additional shares of its
capital stock.
(h) Image will not take any action the taking of which, or omit to
take any action the omission of which, would cause any of the representations
and warranties of Image herein to fail to be true and correct in all respects
as of the date of such action or omission as though made at and as of the date
of such action or omission, except as otherwise specifically contemplated by
this Agreement.
(i) Image will timely file all reports required to be filed by it
with the Commission during such period pursuant to the reporting requirements
to the Exchange Act and the rules and regulations thereunder.
(j) Image will fund any obligations to its employee stock
ownership or stock purchase plans, if any, required by ERISA or the terms of
such plans.
SECTION 7.2 Covenants of Maxim. During the period commencing on
the date hereof and continuing until the Effective Time, Maxim agrees (except
as expressly contemplated by this Agreement or to the extent that Image shall
otherwise consent in writing) that:
(a) Maxim will carry on its businesses in, and only in, the
regular and ordinary course in substantially the same manner as heretofore
conducted, use its best efforts to preserve and protect the businesses, rights,
properties and assets of Maxim and, to the extent consistent with such
businesses, use its best efforts to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it. Maxim agrees that from and after the date hereof,
through the Effective Time, Maxim will not, without the prior consent of Image,
(i) amend its Certificate of Incorporation or Bylaws, except as contemplated by
this Agreement, (ii) terminate or amend in any manner which would directly or
indirectly materially change the benefits under any employee benefit plan, fund
or arrangement, (iii) mortgage, pledge or subject to lien, restriction or other
encumbrance property, business or assets, tangible or intangible, of Maxim or
its subsidiaries, except in the ordinary course of their respective businesses,
as presently conducted, (iv) sell, transfer, lease or otherwise dispose of
assets except in the ordinary course of their respective businesses, as
presently conducted, or (v) make any change in accounting method or annual
accounting period.
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(b) If any action, suit, proceeding or investigation of the nature
specified in Sections 9.1(c) and 9.2(c) hereof is commenced before the
Effective Time, Maxim agrees to cooperate with Image, and use its best efforts
to defend against the same and respond thereto, unless the Board of Directors
of Maxim has made the determination, pursuant to Section 9.1(c) hereof, in its
good faith judgment, that it is not in the best interest of the shareholders of
Maxim to contest such action, in which event prompt written notice of such
determination shall be delivered to Image.
(c) Maxim will use its best efforts to comply promptly with all
requirements which federal or state law may impose on it with respect to the
Merger and will promptly cooperate with and furnish information to Image in
connection with any such requirements imposed upon Image in connection with the
Merger.
(d) Maxim will use its best efforts to obtain (and to cooperate
with Image in obtaining) at the earliest practicable date and prior to the
Effective Time, any consent, authorization or approval of, or any exemption by,
any governmental authority or agency, or other third party, required to be
obtained or made by Maxim (or by Image) in connection with the Merger or the
taking of any action necessary to the transactions contemplated hereby or
thereby.
(e) Maxim will afford to Image and to Image's accountants, counsel
and other representatives, full access, during normal business hours during the
period prior to the Effective Time or the earlier termination of this
Agreement, to all of its properties, books, contracts, commitments and records
(including, with the consent of such auditors, which consent Maxim will use its
best efforts to obtain, the working papers of the independent auditors in
connection with their audits or other services performed for Maxim) and, during
such period, Maxim shall furnish promptly to Image (i) a copy of each report,
schedule and other document filed or received by it during such period pursuant
to the requirements of federal and state securities laws; and (ii) all other
information concerning its business, properties and personnel as Image may
reasonably request. Such investigation shall not affect the representations
and warranties of Maxim contained or provided for herein.
(f) Maxim will promptly advise Image orally and in writing of any
change in the business, results of operations, financial condition, assets,
liabilities or prospects of Maxim which is or may be materially adverse to
Maxim and its subsidiaries taken as a whole. Maxim will promptly advise Image
if, at any time before the Registration Statement becomes effective or the
Effective Time, the Registration Statement or the Proxy Statement, as the same
relate to Maxim and the Subsidiary, contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
In such event or in the event Maxim receives supplemental information
from Image pursuant to Section 7.1(e) hereof, Maxim will prepare a supplement
or amendment to the Registration Statement and the Proxy Statement which
corrects any misstatements or omissions contained therein and furnish to Image
such number of copies of such supplements or amendments as may be required for
distribution to Image's stockholders.
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(g) Maxim will not take any action the taking of which, or omit to
take any action the omission of which, would cause any of the representations
and warranties of Maxim herein to fail to be true and correct in all respects
as of the date of such action or omission as though made at and as of the date
of such action or omission, except as otherwise specifically contemplated by
this Agreement.
(h) Maxim will timely file all reports required to be filed by it
with the Commission during such period pursuant to the reporting requirements
of the Exchange Act and the rules and regulations thereunder.
(i) Maxim will use its best efforts to obtain a commitment from a
bank lender or consortium thereof (collectively, the "Lender") to extend to
Maxim, following the effectuation of the Merger, a credit facility in
principal amount not less than $120,000,000 (the "Credit Facility"), a
permitted use of the proceeds of which is the payment in full of the
indebtedness of Image to its bank lenders under its currently outstanding line
of credit.
(j) Except as set forth in Section 4.2, there will be no
outstanding options, warrants, rights, contracts, commitments, understandings
or arrangements by which Maxim is bound to issue additional shares of its
capital stock.
(k) Maxim will fund any obligations to its employee stock
ownership or stock purchase plans, if any, required by ERISA or the terms of
such plans.
ARTICLE VIII
Additional Agreements
SECTION 8.1 Confidentiality; Standstill.
(a) As a condition to each party hereto furnishing to the other
party hereto or to their directors, officers, employees, lenders, agents and
advisors (collectively, "Representatives") financial and other information that
has not heretofore been made generally available on a nonconfidential basis,
each party hereto agrees to treat such information furnished to it (both orally
and in writing) before or after the date hereof by or on behalf of the other
party or its Representatives and all notes, analyses, compilations, studies,
interpretations and other material prepared by it or its Representatives
containing or based in whole or in part on any such information furnished by or
on behalf of the other party or any of its Representatives (collectively, the
"Evaluation Material"), as follows:
(1) Each party hereto recognizes and acknowledges the
competitive value and confidential nature of the Evaluation Material and the
damage that could result to the other party if information contained therein is
disclosed to any third party.
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(2) Each party hereto agrees that the Evaluation Material
will be used solely for the purpose of evaluating the transaction contemplated
hereby. Each party hereto agrees that it will not disclose any of the
Evaluation Material to any third party without the prior written consent of the
other party hereto; provided, however, that any such information may be
disclosed to its Representatives who need to know such information for the
purpose of evaluating the transaction contemplated herein and who agree to keep
such information confidential and to be bound by the provisions of this Section
8.1(a) to the same extent as if they were parties hereto.
(3) In the event that a party hereto or its
Representatives are requested in any proceeding to disclose any Evaluation
Material, it will give the other party hereto prompt notice of such request so
that the other party hereto make seek an appropriate protective order. If, in
the absence of a protective order, the party or its Representatives are
nonetheless compelled by law to disclose such Evaluation Material, it or its
Representatives, as the case may be, may disclose such information in such
proceeding without liability hereunder; provided, however, that it gives the
other party hereto written notice of the information to be disclosed as far in
advance of its disclosure as is practicable and, upon the request of the other
party and at its expense, use its best efforts to obtain assurances that
confidential treatment will be accorded to such information.
(4) In the event that the transaction contemplated by
this Agreement is not consummated, each party will promptly redeliver to the
other party all copies of all Evaluation Material furnished to it or its
Representatives and will destroy all analyses, compilations, studies and other
material based in whole or in part on such material prepared by or on behalf of
such party.
(5) Each party and its Representatives shall have no
obligation hereunder with respect to any information in the Evaluation Material
furnished by the other party or its Representatives to the extent that such
information (a) has been made public other than by the acts of the recipient
party or acts of its Representatives in violation of this Agreement or (b)
becomes available to the recipient party on a nonconfidential basis from a
source that is entitled to disclose it on a nonconfidential basis.
(6) Each party hereto agrees that money damages would not
be a sufficient remedy for any breach of the agreements set forth in this
Section 8.1(a) by it or its Representatives, and that, in addition to all other
remedies, the other party hereto shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach, and each
party hereto further agrees to waive, and to use its best efforts to cause its
Representatives to waive, any requirements for the securing or posting of any
bond in connection with such remedy. Each party hereto agrees to be
responsible for any breach of its agreement set forth in this Section 8.1(a) by
any of its Representatives.
(b) In the event of termination of this Agreement, for
any reason, prior to the Effective Time, then until the expiration of eighteen
(18) months from the date of such termination, none of
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Maxim, its affiliates (as defined in Rule 405 of the Securities Act of 1933,
hereinafter "Affiliates") or those of Maxim's Representatives to whom the
Evaluation Material has been disclosed or who have been made aware of the
discussions between the parties concerning a possible transaction, shall,
without the prior written consent of the Board of Directors of Image, (i) in
any manner acquire, agree to acquire, or make any proposal to acquire, directly
or indirectly, any voting securities of Image, or any rights or options to
acquire such ownership, or to purchase, directly or indirectly, a material
portion of the assets of Image; provided that the restriction contained in this
clause (i) shall apply only to Maxim, its subsidiaries, its executive officers
and the members of the Board of Directors of Maxim; (ii) propose to enter into,
directly or indirectly, any merger or business combination involving Image;
(iii) make, or in any way participate, directly or indirectly, in any
solicitation of "proxies" (as such term is used in Regulation 14A under the
Securities Exchange Act of 1934, as amended) to vote or seek to advise or
influence any person with respect to the voting of any voting securities of
Image; (iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934) with respect
to any voting securities of Image; (v) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board of Directors or
policies of Image; or (vi) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing.
(c) In the event of termination of this Agreement, for any reason,
prior to the Effective Time, then until the expiration of eighteen (18) months
from the date of such termination, none of Image, its affiliates (as defined in
Rule 405 of the Securities Act of 1933, hereinafter "Affiliates") or those of
Image's Representatives to whom Evaluation Material has been disclosed or who
have been made aware of the discussions between the parties concerning a
possible transaction, shall, without the prior written consent of the Board of
Directors of Maxim, (i) in any manner acquire, agree to acquire, or make any
proposal to acquire, directly or indirectly, any voting securities of Maxim, or
any rights or options to acquire such ownership or to purchase, directly or
indirectly, a material portion of the assets of Maxim, provided that the
restriction contained in this clause (i) shall apply only to Image, its
subsidiaries, its executive officers, and the members of the Board of Directors
of Image; (ii) propose to enter into, directly or indirectly, any merger or
business combination involving Maxim; (iii) make, or in any way participate,
directly or indirectly, in any solicitation of "proxies" (as such term is used
in Regulation 14A under the Securities Exchange Act of 1934, as amended) to
vote or seek to advise or influence any person with respect to the voting of
any voting securities of Maxim; (iv) form, join or in any way participate in a
"group" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934) with respect to any voting securities of Maxim; (v) otherwise act, alone
or in concert with others, to seek to control or influence the management,
Board of Directors or policies of Maxim; or (vi) publicly disclose any
intention, plan or arrangement inconsistent with the foregoing.
(d) The parties agree that the covenants contained in Sections
8.1(b) and 8.1(c) shall be for the respective benefit of Image and Maxim, and
each such respective party shall be entitled to enforce such respective
covenant. The parties also agree that money damages would not be a sufficient
remedy for any violation of the terms of such covenants, and, accordingly, that
the respective enforcing party shall be entitled to equitable relief, including
injunctive relief and specific
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performance in the event of any breach of the provisions of such covenants, in
addition to all other remedies available at law or in equity.
SECTION 8.2 Registration Statement. Maxim shall prepare at its
expense and file as promptly as practicable hereafter with the Commission the
Registration Statement with respect to the Maxim Common Stock issuable pursuant
to the Merger, which Registration Statement shall include the Proxy Statement
(and which Proxy Statement, insofar as it relates to the meeting of
shareholders of Image for approval of the Merger, shall be reasonably
acceptable to Image in all respects), and shall use all reasonable efforts to
have the Registration Statement declared effective by the Commission as
promptly as practicable. Maxim shall also take any action required to be taken
under any applicable state blue sky or securities laws in connection with the
issuance of the Maxim Common Stock to be issued as set forth in this Agreement.
Image shall furnish all information concerning Image and the holders of Image
Common Stock as may be reasonably requested in connection with the issuance of
the Maxim Common Stock to be issued as set forth in this Agreement.
SECTION 8.3 Approval of Stockholders. Each of Maxim and Image
shall cause a meeting of its respective stockholders to be duly called and held
on or before September 15, 1996, or as soon thereafter as practicable following
effectiveness of the Registration Statement (and allowing a reasonable period
of time to solicit proxies) for the purpose of approving the Merger, this
Agreement and all actions contemplated hereby which require the approval of
such corporation's respective stockholders. Image will, through its Board of
Directors, consistent with their fiduciary duties, recommend to Image's
stockholders, and use its best efforts to obtain approval by the stockholders
of Image of the transactions contemplated by this Agreement. Maxim will,
through its Board of Directors, consistent with their fiduciary duties,
recommend to Maxim's stockholders, and use its best efforts to obtain approval
by the stockholders of Maxim of the transactions contemplated by this
Agreement.
SECTION 8.4 No Solicitation. (a) From and after the date of
this Agreement until the Effective Time, or the earlier termination of this
Agreement, Image and its directors, officers and employees will not, and Image
will use its best efforts to cause its representatives, investment bankers,
agents and affiliates not to, directly or indirectly, (i) initiate, solicit or
cooperate with submission of any inquiries, proposals or offers by any person,
entity or group (other than Maxim, the Subsidiary and their affiliates, agents
and representatives) relating to any Acquisition Proposal (as hereinafter
defined), or (ii) participate in any discussions or negotiations with, or
disclose any non-public information concerning Image to, or afford any access
to the properties, books or records of Image to, or otherwise assist,
facilitate or cooperate with, or enter into any agreement or understanding
with, any person, entity or group (other than Maxim, the Subsidiary and their
affiliates, agents and representatives) in connection with any Acquisition
Proposal. For the purposes of this Section 8.4(a), an "Acquisition Proposal"
shall mean any proposal relating to the possible acquisition of (i) Image
(whether by way of merger or otherwise), (ii) all or a substantial portion of
the assets of Image or (iii) a substantial portion of the equity securities of
Image (except by conversion or exercise of currently outstanding securities).
In addition, subject to the other provisions of this Section 8.4, from and
after the date of this Agreement until the Effective Time,
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Image and its directors, officers and employees will not, and Image will use
its best efforts to cause its representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any statement,
recommendation or solicitation in support of any Acquisition Proposal made by
any person, entity or group (other than Maxim and the Subsidiary). Image will
immediately cease any existing discussions, negotiations or other activities
with any parties with respect to any of the foregoing.
(b) From and after the date of this Agreement until the Effective
Time or the earlier termination of this Agreement, Maxim and its subsidiaries
and their respective directors, officers and employees will not, and Maxim will
use its best efforts to cause their respective representatives, investment
bankers, agents and affiliates not to, directly or indirectly, (i) initiate,
solicit or cooperate with submission of any inquiries, proposals or offers by
any person, entity or group (other than Image and its affiliates, agents and
representatives) relating to any Acquisition Proposal (as hereinafter defined),
or (ii) participate in any discussions or negotiations with, or disclose any
non- public information concerning Maxim or any of its subsidiaries to, or
afford any access to the properties, books or records of Maxim or any of its
subsidiaries to, or otherwise assist, facilitate or cooperate with, or enter
into any agreement or understanding with, any person, entity or group (other
than Image and its affiliates, agents and representatives) in connection with
any Acquisition Proposal. For the purposes of this Section 8.4(b) an
"Acquisition Proposal" shall mean any proposal relating to the possible
acquisition (i) of Maxim (whether by way of merger or otherwise), (ii) of all
or a substantial portion of the assets of Maxim or (iii) of a substantial
portion of the equity securities of Maxim (except by conversion or exercise of
currently outstanding securities) or (iv) by Maxim of substantially all the
securities or assets of a business a substantial part of which is the
manufacture of carpet or similar floor covering, provided that none of the
provisions of clauses (ii), (iii) or (iv) of the sentence shall prohibit any
payment of cash or issuance of securities by Maxim in a transaction not
otherwise prohibited by clause (iv) and involving the acquisition of a business
which, considered as if it were a subsidiary of Maxim, would not be a
"significant subsidiary" or defined in Registration S-X of the Securities and
Exchange Commission. In addition, subject to the other provisions of this
Section 8.4, from and after the date of this Agreement until the Effective
Time, Maxim and its subsidiaries and their respective directors, officers and
employees will not, and Maxim will use its best efforts to cause their
respective representatives, investment bankers, agents and affiliates not to,
directly or indirectly, make or authorize any statement, recommendation or
solicitation in support of any Acquisition Proposal made by and person, entity
or group (other than Image). Maxim will immediately cease any existing
discussions, negotiations or other activities with any parties with respect to
any of the foregoing.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, Maxim or Image, as applicable (such entity hereinafter called "Target")
may, to the extent the Board of Directors of Target determined in good faith,
after consultation with outside legal counsel, that the Board's fiduciary
duties under applicable law require it to do so, participate in discussions or
negotiations with, and, subject to the requirements of paragraph (d) below,
furnish information to any person, entity or group after such person, entity or
group shall have delivered to Target in writing an unsolicited bona fide
Acquisition Proposal (as defined in subsection (a) or (b) hereof, as
applicable) which is not subject to any financing contingency and which the
Board of Directors of
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Target in its good faith reasonable judgment determines, after consultation
with its principal advisors in connection with the transactions contemplated
herein, would upon consummation thereof result in a transaction more favorable
to the stockholders of Target than the transactions contemplated herein and for
which financing, to the extent required, is then committed or which, in the
good faith reasonable judgment of the Board of Directors of Target (based upon
the advice of its principal advisors in connection with the transactions
contemplated herein), is reasonably capable of being financed by such person,
entity or group and which is probable to be consummated (a "Superior
Proposal"). In addition, notwithstanding the provisions of paragraph (a)
above, in connection with a possible Acquisition Proposal (as defined in
subsection (a) or (b) hereof, as applicable), Target may refer any third party
to this Section 8.4 or make a copy of this Section 8.4 available to a third
party.
(d) A Target may furnish information with respect to a Superior
Proposal only if the Target (i) notifies the other party hereto (Maxim or
Image, as applicable) of the information proposed to be disclosed reasonably
concurrently with the disclosure thereof, (ii) first complies with the
provisions of paragraph (f) below and (iii) provides such information pursuant
to a confidentiality agreement at least as restrictive (but with provisions
specifically permitting compliance with Section 8.4(f) hereof) as the
provisions of Section 8.1(a) hereof.
(e) In the event, a Target receives a Superior Proposal, nothing
contained in this Agreement shall prevent the Board of Directors of such Target
from approving such Superior Proposal or recommending such Superior Proposal to
its stockholders, if the Board determines reasonably and in good faith, after
consultation with outside legal counsel, that such action is required by its
fiduciary duties under applicable law; in such case, the Board may amend or
withdraw its approval or recommendation of the Merger. Subject to the right of
termination set forth in Section 10.1(c)(iii) or 10.1(d)(iii), as applicable,
except to the extent expressly set forth in this Section 8.4, nothing shall
relieve the Target from complying with all other terms of this Agreement.
(f) A Target will (i) notify the other party hereto (Maxim or
Image, as applicable) immediately if any inquiry or proposal is made or any
information or access is requested in connection with an Acquisition Proposal
or potential Acquisition Proposal and (ii) immediately communicate to such
other party the terms and conditions of any such Acquisition Proposal or
potential Acquisition Proposal or inquiry and the identity of the offeror or
potential offeror.
(g) Nothing contained in this Section 8.4 shall prevent a Target
or its Board of Directors from complying with the provisions of Rule 14e-2(a)
and 14d-9 promulgated under the Exchange Act.
SECTION 8.5 Identification of Affiliates. Image shall deliver to
Maxim a letter identifying all persons who are, at the time the Merger is
submitted to a vote of the stockholders of Image, "affiliates" of Image for
purposes of Rule 145 under the Securities Act.
SECTION 8.6 Issuance of Shares. Maxim shall, as and when
required by the provisions hereof, issue and deliver to the Exchange Agent
certificates representing the number of shares of
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Maxim Common Stock to be issued to the Image stockholders in the Merger and
sufficient funds to provide for the fractional share cash payments to be paid
to any Image stockholders in the Merger.
SECTION 8.7 Expenses; Termination Fee. (a) Whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
(b) If: (1) this Agreement is terminated by Maxim pursuant to
Section 10.1(c)(i); or (2) this Agreement is terminated by Image pursuant to
Section 10.1(d)(iii) hereof; or (3)(i) Image (or any of the persons named in
such subsection acting on behalf of Image) commits a breach of Section 8.4
hereof, or (ii) a tender or exchange offer for any shares of capital stock of
Image or any business combination of the type described in Section 8.4 shall
have been made or publicly proposed to be made by any person, entity or group
(as that term is used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) other than Maxim, and either (A) the Board of Directors of
Image shall have announced a position in favor of such tender or exchange offer
or business combination, or (B) in the case of a tender or exchange offer, the
offerer successfully acquires pursuant thereto shares representing more than
51% of the total outstanding voting stock of Image; then Image shall pay to
Maxim a termination fee of $3,000,000. Such payment is intended by the parties
to constitute liquidated damages and not a penalty.
(c) If: (1) this Agreement is terminated by Image pursuant to Section
10.1(d)(i); or (2) this Agreement is terminated by Maxim, pursuant to Section
10.1(c)(iii); or if (3)(i) Maxim (or any of the persons named in such
subsection acting on behalf of Maxim) commits a breach of Section 8.4 hereof,
or (ii) a tender or exchange offer for any shares of capital stock of Maxim or
any business combination of the type described in Section 8.4 shall have been
made or publicly proposed to be made by any person, entity or group (as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) other than Image, and either (A) the Board of Directors of Maxim shall
have announced a position in favor of such tender or exchange offer or business
combination, or (B) in the case of a tender or exchange offer, the offerer
successfully acquires pursuant thereto shares representing more than 51% of the
total outstanding voting stock of Maxim; then Maxim shall pay to Image a
termination fee of $3,000,000. Such payment is intended by the parties to
constitute liquidated damages and not a penalty.
SECTOPM 8.8 Hart-Scott-Rodino Filing. Within ten (10) business
days after the execution hereof, Image and Maxim shall file Notification and
Report Forms under the Hart-Scott-Rodino Act with the Federal Trade Commission
and the Antitrust Division of the Department of Justice.
SECTION 8.9 Stockholder Communication. From and after the date
hereof, neither Image nor Maxim will, with respect to the transactions
contemplated hereby, issue any press release or make any public statements or
mail any communications or letters to their respective stockholders generally
(except Maxim's and Image's annual and quarterly reports to stockholders)
without the prior approval of the other party and its counsel, except as
required by law, the rules of the Nasdaq-NMS or the rules of the National
Association of Securities Dealers, Inc.
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SECTION 8.10 Rule 144 Considerations. Maxim shall (i) satisfy the
current public information requirements set forth in paragraph (c) of Rule 144
under the Securities Act (or any rule or regulation ,which may be substituted
for or replace, and which is substantially similar to, such paragraph (c)); and
(ii) upon request by an affiliate identified pursuant to Section 8.5 who
receives Maxim Common Stock in the Merger, make promptly available to such
affiliate any and all information relating to Maxim and its outstanding
securities as such affiliate may require in consummating a sale pursuant to
Rule 144 under the Securities Act (or any rule or regulation which may be
substituted for or replace, and which is substantially similar to, Rule 144);
and (iii) file such reports and take such action as may be necessary on its
part to permit such affiliate to sell Maxim Common Stock under Rule 144 (or any
rule or regulation which may be submitted for or replace, and which is
substantially similar to, Rule 144).
SECTION 8.11 Stock Options. Maxim shall use its best efforts to
obtain shareholder approval, to the extent required by the terms of such plan,
of such increase in the number of shares of Maxim Common Stock covered by its
employee stock option plans as necessary to permit issuance of such options as
required by Section 3.1(e) hereof.
SECTION 8.12 Post Effectiveness Management Matters. (a) Maxim
will cause to be called and held immediately following the Effective Time a
special meeting of the Board of Directors of Maxim, at which meeting the Board
of Directors of Maxim shall take all action necessary to increase the number of
members of the Maxim Board of Directors by such number of members (if any) as
is necessary to take the action contemplated by this Section 8.12 (a), and:
(i) to elect as members of such Board of Directors (x) Larry M.
Miller, (y) H. Stanley Padgett, and (z) such additional individual,
reasonably acceptable to the members of the Board of Directors voting
in such election, as designated by agreement between Messrs. Miller
and Padgett, provided that such third individual is not, at the time
of such election, an employee of either Maxim or Image; and
(ii) to elect each of Larry M. Miller and H. Stanley Padgett as a
Senior Executive Vice President of Maxim.
(b) Immediately following the Effective Time, Maxim shall vote its
stock in the Surviving Corporation in favor of the election of a Board of
Directors of the Surviving Corporation consisting of (i) Larry M. Miller, (ii)
H. Stanley Padgett, (iii) one individual designated by the Chief Executive
Officer of Maxim, and (iii) two other individuals designated by mutual
agreement between Messrs. Miller and Padgett.
SECTION 8.13 Amendments to Maxim Certificate of Incorporation. If
necessary, Maxim will use its best efforts to cause its shareholders to approve
the amendment of, and to amend, its Certificate of Incorporation on or before
the Effective Time (i) to increase the authorized number of shares of Maxim
Common Stock to provide for the issuance of the shares of Maxim Common Stock
(or options covering such shares, as applicable) to the stockholders and option
holders of Image as contemplated herein and (ii) to authorize amendment of its
By-laws by action of its Board
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of Directors, without shareholder approval, as necessary to permit the actions
contemplated by Section 8.12(a) hereof.
SECTION 8.14 Tax Treatment: Accounting Treatment. (a) Each of
Image and Maxim agree to use their respective best efforts to cause the Merger
to qualify as a tax-free reorganization under Section 368(a)(2)(E) of the Code.
(b) Image and Maxim agree to use their respective best efforts to
cause the Merger to be accounted for as a pooling of interests and to use their
respective best efforts to cause their affiliates to take such actions as shall
be necessary to permit the Merger to qualify for such accounting treatment.
Image and Maxim each covenant not to take, and each covenant to use its best
efforts to cause its affiliates not to take, prior to the Effective Time, any
action that could in any manner adversely affect such qualification other than
as disclosed on Disclosure Schedule 8.14.
(c) Image shall use its best efforts to cause each of its
affiliates identified pursuant to Section 8.5, and Maxim will use its best
efforts to cause each of its affiliates required pursuant to Section 9.2(s), to
deliver a written undertaking, in form reasonably satisfactory to Maxim, to the
effect that:
(i) During the period from the execution of this
Agreement until thirty (30) days prior to the Effective Time
such affiliate has not and will not transfer or otherwise
dispose of any securities of Image or Maxim, as applicable,
held by such affiliates, except for transfers or other
dispositions by operation of law upon the death of such
affiliates or by the estate of such affiliates if necessary to
pay estate taxes or other transfers or dispositions that Maxim
determines will not prevent Maxim from accounting for the
Merger as a pooling of interests, taking into account the
actions of other affiliates.
(ii) From and after thirty (30) days prior to the
Effective Time, such affiliate will not sell, transfer or
otherwise dispose of any securities of Image or Maxim,
including shares of Maxim Common Stock received by such
affiliate in the Merger, until after such time as financial
results covering at least thirty (30) days of combined
operations of Image and Maxim have been published by Maxim, in
the form of a quarterly earnings report, an effective
registration statement filed with the SEC, a report to the SEC
on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes the combined results of operations
(which publication shall be effected by Maxim at the earliest
reasonably practicable opportunity), except for transfers or
other dispositions that Maxim determines, taking into account
the actions of other affiliates, will not prevent Maxim from
accounting for the Merger as a pooling of interests.
SECTION 8.15 Registration of Option Shares. Not later than 30
days following the date of first publication of financial statements covering
at least 30 days of combined operations of Maxim and the Surviving Corporation,
Maxim shall cause to be filed with the Securities and
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Exchange Commission, pursuant to the Securities Act of 1933, as amended, a
registration statement on Form S-3 (or other appropriate registration form)
which shall cover the resale, by the holders of such options, of the shares of
Maxim Common Stock (the "Merger Option Shares") covered by the Corresponding
Nonqualified Options issued at the Effective Time pursuant to Section 3.1(e)
hereof, and shall use its best efforts (i) to cause such registration statement
to be declared effective at the earliest practicable time thereafter, and (ii)
to maintain such registration statement as effective until the earlier of (a)
the resale by the option holders to whom such shares are originally issued of
all the Merger Option Shares, or (b) June 30, 1998.
SECTION 8.16 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or reasonably advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by the Merger and this Agreement, including using its best efforts
to obtain all necessary waivers, consents and approvals and effecting all
necessary registrations and filings. In case at any time after the Effective
Time any further action is necessary or reasonably desirable to carry out the
purposes of this Agreement, the proper officers and directors of Maxim, the
Subsidiary or Image, as the case may be, shall take all such necessary action.
SECTION 8.17 Closing Conditions. Maxim and Image will use their
best efforts to cause the conditions set forth in Article IX to occur.
ARTICLE IX
Conditions
SECTION 9.1 Conditions to Obligations of Maxim and the Subsidiary
to Proceed with the Merger. Notwithstanding any other provision of this
Agreement, each of the following shall be a condition to the obligation of
Maxim and the Subsidiary to consummate the Merger:
(a) The representations and warranties made by Image herein shall
have been true in all material respects as of the date of this Agreement and
shall be true in all material respects as of the Effective Time as though made
on and as of the Effective Time; and it is understood that all representations
and warranties made by Image herein if specifically stated to be as of the date
hereof shall be deemed to be true as of the Effective Time if true as of the
date hereof;
(b) Image shall have performed in all material respects every
obligation and complied with in all material respects each agreement, covenant
and condition required by this Agreement to be performed or complied with by it
prior to or at the Effective Time and Image shall have delivered to Maxim a
certificate dated the Effective Time and signed on its behalf by its Chairman
of the Board or its President and its Secretary or Treasurer, certifying the
satisfaction of the conditions set forth in this paragraph and in paragraph
9.1(a);
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(c) No preliminary or permanent injunction or other order by any
federal or state court which prevents the consummation of the Merger shall have
been issued and shall remain in effect, nor any action therefor initiated
which, in the good faith judgment of the Board of Directors of Maxim, it is not
in the best interests of the shareholders of Maxim to contest; and there shall
not have been instituted or be pending any action or proceeding by any United
States federal or state government or governmental agency or instrumentality
(i) challenging or seeking to restrain or prohibit the consummation of the
Merger or seeking material damages in connection with the Merger; or (ii)
seeking to prohibit Maxim's or the Surviving Corporation's ownership or
operation of all or a material portion of Maxim's or Image's business or
assets, or to compel Maxim or the Surviving Corporation to dispose of or hold
separate all or a material portion of Maxim's or Image's business or assets as
a result of the Merger, which, in any case, in the reasonable judgment of Maxim
based upon a legal opinion from an independent legal counsel, could result in
the relief sought being obtained;
(d) There shall not have been any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable
to the Merger by any United States federal or state government or governmental
agency or instrumentality or court which would (i) prohibit Maxim's or the
Surviving Corporation's ownership or operation of all or a material portion of
Maxim's or Image's business or assets, or compel Maxim or the Surviving
Corporation to dispose of or hold separate all or a material portion of Maxim's
or Image's business or assets, or compel Maxim or the Surviving Corporation to
dispose of or hold separate all or a material portion of Image's or Maxim's
business or assets, as a result of the Merger, (ii) render Maxim unable to
consummate the Merger, or (iii) make such consummation illegal;
(e) No material adverse change shall have occurred in the
business, results of operations, assets, financial condition, or prospects of
Image, including any judgment, decree, injunction, ruling or order rendered in
connection with any litigation referred to in Section 5.12 hereof, which, in
the reasonable opinion of Maxim, if not successfully appealed would result in
such a material adverse change;
(f) The Merger and this Agreement (including, without limitation,
such approval as required by Section 8.11 hereof) shall have been validly
approved by the requisite vote of the stockholders of each of Maxim and Image.
(g) The Certificate of Merger shall have been executed by the duly
authorized officer(s) of Image;
(h) The Registration Statement shall have become effective, and no
stop order suspending such effectiveness or proceedings for that purpose shall
have been issued and remain in effect;
(i) Maxim shall have received from Parker, Johnson, Cook &
Dunlevie, counsel to Image, an opinion dated the Effective Time, such opinion
to be to the effect set forth in Exhibit D attached hereto;
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(j) Maxim shall have received from KPMG Peat Marwick LLP,
independent accountants for Image, a letter dated the effective date of the
Registration Statement, a letter dated the date of each of the respective
meetings of the stockholders of Image and Maxim which approves the transactions
contemplated hereby and a letter dated the Effective Time, each letter to be to
the effect set forth in Exhibit E attached hereto;
(k) Maxim shall have received the following documents from Image,
all of which shall be in a form and substance reasonably acceptable to Maxim
and its counsel:
(i) Certified copy of resolutions adopted by Image's
Board of Directors approving this Agreement, the Certificate of
Merger and the transactions contemplated hereby and thereby;
(ii) Certified copy of resolutions adopted by Image's
stockholders approving the transactions contemplated hereby;
(iii) Certificate of incumbency executed by the Secretary
of Image indicating the current officers and directors of Image;
(iv) Certificate of good standing of Image dated not more
than ten (10) days prior to the Effective Time from the Secretary of
State of Delaware; and
(v) Such other certificates, documents or instruments as
Maxim or its counsel may reasonably require.
(l) Maxim shall have received copies of consents of all third
parties necessary for Image to execute, deliver and perform this Agreement and
consents of all third parties having material business relationships with Image
if consent to or approval of transactions of the nature herein contemplated is
required in order to prevent a material adverse change in such business
relationship, such as acceleration of indebtedness by a lender or a declaration
of default by a landlord;
(m) All applicable waiting periods under the Hart-Scott-Rodino Act
shall have expired or terminated.
(n) The shares of Maxim Common Stock to be issued pursuant to the
Merger shall have been approved for listing on the Nasdaq-NMS, subject to
official notice of issuance.
(o) The members of the Board of Directors of Image as of the
Effective Time shall have submitted their written resignations as directors of
Image, effective as of the Effective Time.
(p) The amendments to the Certificate of Incorporation of Maxim
described in Section 8.13 shall have been approved by the requisite vote of the
stockholders of Maxim.
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(q) Maxim shall have received an opinion from Prudential that the
transactions contemplated by this Agreement are fair, from a financial point of
view, to the stockholders of Maxim, and each of Maxim and Image shall have
received an originally executed counterpart of the written opinion of the
Financial Advisor described in Section 5.20.
(r) Maxim shall have received from such of the affiliates of Image
(designated pursuant to Section 8.5 hereof) as it determines necessary in its
sole discretion a letter of undertaking, in form satisfactory to Maxim and its
counsel, acknowledging the restrictions imposed by the federal securities laws
and regulations thereunder (including but not limited to SEC Rule 145) on the
shares of Maxim Common Stock to be received by such persons, and agreeing to be
bound by such restrictions.
(s) Maxim shall have received from each of the affiliates of Image
(designated pursuant to Section 8.5 hereof), and from each such affiliate of
Maxim as Maxim determines necessary in its sole discretion, a written
undertaking in form and substance contemplated in Section 8.14 hereof.
(t) Image shall have received an opinion of its tax counsel, in
form reasonably acceptable to both Image and Maxim, to the effect that the
Merger will be a tax free reorganization under Code Section 368(a)(1)(A) and
368(a)(2)(E), as well as the consent of such counsel to the inclusion of such
opinion in the Registration Statement and Proxy Statement.
(u) Maxim shall have determined to its satisfaction that the
Merger will be accounted for as a pooling of interests.
(v) All employment agreements to which Image is a party at the
date hereof other than the employment agreements between Image and H. Stanley
Padgett and Larry M. Miller, respectively, shall have been terminated, or shall
have expired in accordance with their terms without renewal, and in either case
without liability of the Surviving Corporation for any payment of severance
payments or severance benefits under any such agreement, and Image shall not
have become a party to any other employment agreements except as consented to
by Maxim.
(w) Maxim shall have received such other certificates, documents
and instruments as it shall have reasonably requested.
SECTION 9.2 Conditions to Obligations of Image to Proceed with
the Merger. Notwithstanding any other provisions of this Agreement, each of
the following shall be a condition to the obligation of Image to consummate the
Merger:
(a) The representations and warranties made by Maxim herein shall
have been true in all material respects as of the date of this Agreement and
shall be true in all material respects as of the Effective Time as though made
on and as of the Effective Time; and it is understood that all representations
and warranties made by Maxim herein if specifically stated to be as of the date
hereof shall be deemed to be true as of the Effective Time if true as of the
date hereof;
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(b) Maxim and the Subsidiary shall each have performed in all
material respects every obligation and complied with in all material respects
each agreement, covenant or condition required by this Agreement to be
performed or complied with by them prior to or at the Effective Time, and Maxim
shall have delivered to Image a certificate dated the Effective Time and signed
on its behalf by its Chairman or President and its Secretary or Treasurer
certifying the satisfaction of the conditions set forth in this paragraph and
in paragraph 9.2(a);
(c) No preliminary or permanent injunction or other order by any
federal or state court which prevents the consummation of the Merger shall have
been issued and shall remain in effect, nor any action therefor initiated
which, in the good faith judgment of the Board of Directors of Image, it is not
in the best interests of the shareholders of Image to contest; and there shall
not have been instituted or be pending any action or proceeding by any United
States federal or state government or governmental agency or instrumentality
(i) challenging or seeking to restrain or prohibit the consummation of the
Merger or seeking material damages in connection with the Merger or (ii)
seeking to prohibit Maxim's or the Surviving Corporation's ownership or
operation of all or a material portion of Maxim's or Image's business or
assets, or to compel Maxim or the Surviving Corporation to dispose of or hold
separate all or a material portion of Maxim's or Image's business or assets as
a result of the Merger, which, in any case, in the reasonable judgment of
Image, based on an opinion from independent legal counsel, could result in the
relief sought being obtained;
(d) There shall not have been any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable
to the Merger by any United States federal or state government or governmental
agency or instrumentality or court which would (i) prohibit Maxim's or the
Surviving Corporation's ownership or operation of all or a material portion of
Maxim's or Image's business or assets, or compel Maxim or the Surviving
Corporation to dispose of or hold separate all or a material portion of Maxim's
or Image's business or assets, or compel Maxim or the Surviving Corporation to
dispose of or hold separate all or a material portion of Image's or Maxim's
business or assets, as a result of the Merger, (ii) render Image unable to
consummate the Merger, or (iii) make such consummation illegal;
(e) No material adverse change shall have occurred in the
business, results of operations, assets, financial condition, or prospects of
Maxim, including any judgment, decree, injunction, ruling or order rendered in
connection with any litigation referred to in Section 4.10 hereof, which, in
the reasonable opinion of Image, if not successfully appealed would result in
such a material adverse change;
(f) The Merger and this Agreement (including, without limitation,
such approval as required by Section 8.11 hereof) shall have been validly
approved by the requisite vote of the stockholders of each of Maxim and Image;
(g) The Agreement of Merger and Certificate of Merger shall have
been executed by the duly authorized officer(s) of Subsidiary;
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(h) The Registration Statement shall have become effective and no
stop order suspending such effectiveness or proceedings for that purpose shall
have been issued and remain in effect;
(i) Image shall have received an opinion of Smith, Gambrell &
Russell, counsel to Maxim and the Subsidiary, to the effect set forth in
Exhibit F attached hereto;
(j) Image shall have received from Arthur Andersen LLP,
independent accountants for Maxim, a letter dated the date of the Proxy
Statement and a letter dated the Effective Time, each letter to be to the
effect set forth in Exhibit G hereto;
(k) Image shall have received the following documents from Maxim
and Subsidiary, all of which shall be in a form and substance reasonably
acceptable to Image and its counsel:
(i) Certified copy of resolutions adopted by the Boards
of Directors and stockholders of Maxim and Subsidiary approving this
Agreement, the Certificate of Merger and the transactions contemplated
hereby and thereby, including the issuance of the Maxim Common Stock
and the options (contemplated by Section 3.1(e) hereof) to be issued
pursuant hereto and the amendments to the Certificate of Incorporation
of Maxim contemplated hereby;
(ii) Certified copy of resolutions adopted by Maxim as the
sole stockholder of Subsidiary approving this Agreement, the
Certificate of Merger and the transactions contemplated hereby;
(iii) Certificate of incumbency executed by the Secretary
or Assistant Secretary of Maxim indicating the current officers and
directors of Maxim and Subsidiary;
(iv) Certificates of good standing from the Secretary of
State of Delaware for each of Maxim and Subsidiary, each dated not
more than ten (10) days prior to the Effective Time; and
(v) Such other certificates, documents or instruments as
Image or its counsel may reasonably require.
(l) Image shall have received copies of consents of all third
parties necessary for Maxim to execute, deliver and perform this Agreement and
consents of all third parties having material business relationships with Maxim
if consent to or approval of transactions of the nature herein contemplated is
required in order to prevent a material adverse change in such business
relationship, such as acceleration of indebtedness by a lender or a declaration
of default by a landlord;
(m) All applicable waiting periods under the Hart-Scott-Rodino Act
shall have expired or terminated;
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(n) The shares of Maxim Common Stock to be issued pursuant to the
Merger shall have been approved for listing on the Nasdaq-NMS, subject to
official notice of issuance.
(o) The amendments to the Certificate of Incorporation of Maxim
described in Section 8.13 shall have been approved by the requisite vote of the
stockholders of Maxim.
(p) The condition set forth in Section 9.1(t) shall have been
fulfilled.
(q) Image shall have received an opinion from the Financial
Advisor that the transactions contemplated by this Agreement are fair, from a
financial point of view, to the stockholders of Image, and each of Maxim and
Image shall have received an originally executed counterpart of the written
opinion of Prudential described in Section 4.19.
(r) Image shall have determined to its satisfaction that the
Merger will be accounted for as a pooling of interests.
(s) Maxim shall have received from each of the affiliates of Image
(designated pursuant to Section 8.5 hereof), and from each such affiliate of
Maxim as Maxim determines necessary in its sole discretion, a written
undertaking in form and substance contemplated in Section 8.14 hereof.
(t) Maxim shall have received, and delivered to Image a copy of,
the Lender's commitment letter with respect to the Credit Facility, as
described in Section 7.2(i), which commitment letter shall be reasonably
satisfactory to Image.
(u) The Surviving Corporation shall have entered into employment
agreements with Larry M. Miller and H. Stanley Padgett in the forms attached
to this Agreement as Exhibits H and I, respectively, to be effective as of the
Effective Time.
(v) Image shall have terminated each of the Indemnity Agreements
to which it is a party as of the date of this Agreement with executive officers
or members of its Board of Directors ("Image Indemnitees"), and shall not have
entered into any additional such agreements with present or former executive
officers or members of its Board of Directors, except that Image may,
immediately prior to the Effective Time, enter into a substitute indemnity
agreement, in the form attached hereto as Exhibit J, with any person who is, as
of the date hereof, an Image Indemnitee.
(w) The Board of Directors of Maxim shall have adopted a
resolution authorizing the Surviving Corporation, in the discretion of
executive management of such corporation, to proceed with completion of
implementation of the Capital Expenditure Plan following the Effective Time, on
the terms and within the time contemplated by the Capital Expenditure Plan,
with such modifications or amendments as shall be agreed to by the chief
executive officer of the Surviving Corporation.
(x) Image shall have received, and delivered to Maxim, such
consent to the Merger and the transactions contemplated hereby as shall be
required, under the terms of such loan agreements,
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in order for Image's entry into and performance of the Merger and the
transactions contemplated by this Agreement not to constitute an event of
termination or default under the terms of Image's loan agreements with its
current lenders, The First National Bank of Boston, First Union National Bank
of Georgia and Wachovia Bank of Georgia, N.A.
(y) Image shall have received such other certificates, documents
and instruments as it shall have reasonably requested.
ARTICLE X
Termination, Amendment and Waiver
SECTION 10.1 Termination. This Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, whether before or after approval by the shareholders of Image
or Maxim:
(a) by mutual consent of Maxim and Image; or
(b) by either Maxim or Image if (i) the Merger shall not have been
consummated on or before December 31, 1996 (the "Termination Date"), (ii) the
requisite vote of the shareholders of Image or Maxim to approve this Agreement
and the transactions contemplated hereby shall not be obtained at the
respective meeting of the shareholders of such corporation called for such
purpose or any adjournment thereof, or (iii) any court of competent
jurisdiction in the United States or any State shall have issued an order,
judgment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Merger and such terminating party
determines in good faith that the pendency of such order, judgment or decree
renders the consummation of the Merger impracticable; provided that the right
to terminate this Agreement under this Section 10.1(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to occur
on or before such date; or
(c) by Maxim (i) if the Board of Directors of Image shall have
withdrawn or modified in a manner adverse to Maxim its approval or
recommendation of the Merger, this Agreement or the transactions contemplated
hereby, or shall have resolved to do any of the foregoing, or (ii) there has
been (x) a material breach of any covenant, or agreement on the part of Image
or failure of a condition in Section 9.1 hereof which has not been cured or
adequate assurance (acceptable to Maxim in its sole discretion) of cure given,
in either case within 15 business days following receipt of notice of such
breach, or (y) a breach of a representation or warranty of Image herein which
by its nature cannot be cured prior to the Termination Date; or (iii) if the
Board of Directors of Maxim, pursuant to actions permitted by Section 8.4(e)
hereof, shall have authorized Maxim to enter into an agreement with any third
party with respect to, or shall have approved or recommended to the
shareholders of Maxim for approval, a Superior Proposal; or
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(d) by Image (i) if the Board of Directors of Maxim shall have
withdrawn or modified in a manner adverse to Image its approval or
recommendation of the Merger, this Agreement or the Transactions contemplated
hereby, or shall have resolved to do any of the foregoing, or (ii) there has
been (x) a material breach of any covenant, or agreement on the part of Maxim
or failure of a condition in Section 9.2 hereof which has not been cured or
adequate assurance (acceptable to Image in its sole discretion) of cure given,
in either case within 15 business days following receipt of notice of such
breach or (y) a breach of a representation or warranty of Maxim herein which by
its nature cannot be cured prior to the Termination Date; or (iii) if the Board
of Directors of Image, pursuant to the actions permitted by Section 8.4(e)
hereof, shall have authorized Image to enter into an agreement with any third
party with respect to, or shall have approved or recommended to the
shareholders of Image for approval, a Superior Proposal; or
(e) by either Maxim or Image if, as of any date prior to the
Effective Time, the Maxim Market Value is equal to or less than $11.00 (as used
herein, the term "Maxim Market Value" shall mean the average of the closing
prices as reported on the NASDAQ National Market of one share of Maxim Common
Stock for the five (5) trading days immediately preceding the date for which
such determination is made).
SECTION 10.2 Effect of Termination. In the event of termination
of this Agreement by either Maxim or Image as provided above, this Agreement
shall forthwith become void and there shall be no liability hereunder on the
part of Maxim or Image or their respective officers or directors except for
willful breach and except that the agreements with respect to confidentiality
contained in Section 8.1, and the agreements with respect to fees, expenses and
liquidated damages contained in Section 8.7 hereof, shall survive the
termination hereof.
SECTION 10.3 Amendment. This Agreement may be amended by the
parties hereto at any time before or after approval hereby of the stockholders
of Image to the extent permitted by law. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 10.4 Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by their respective Boards of Directors, may
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto; (ii) waive any inaccuracies in the representations
and warranties of the other parties contained herein or in any document
delivered pursuant hereto; and (iii) waive compliance with any of the
agreements of the other parties or satisfaction of any of the conditions to its
obligations contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party.
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ARTICLE XI
General Provisions
SECTION 11.1 Survival of Representations, Warranties and
Agreements. The parties agree that the representations, warranties and
agreements in this Agreement or in any exhibit, disclosure schedule,
certificate or other instrument delivered pursuant to this Agreement shall not
survive the Effective Time, with the exception of the agreements contained in
Sections 8.1, 8.7, 8.10, 8.11, 8.12 and 8.15 hereof. In the event that a fact
or matter is discovered which the discovering party determines to be a breach
of a representation or warranty, it shall promptly notify the other parties
hereto in writing.
SECTION 11.2 Closing. The closing of the transactions
contemplated by this Agreement shall take place (i) at the offices of Smith,
Gambrell & Russell, Suite 1800, 3343 Peachtree Road, N.E., Atlanta, Georgia
30326, on the same business day as, and immediately following the later to
occur of, the Image stockholder meeting or the Maxim stockholder meeting,
provided that each of the conditions set forth in Article IX is fulfilled or
waived; or (ii) at such other time and place as Maxim and Image shall agree.
SECTION 11.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, transmitted by confirmed facsimile transmission to the fax number
set forth below (or such other fax number for a party as shall be specified in
a notice to all other parties meeting the requirements of this section), or
when mailed by registered or certified mail (return receipt requested and
postage prepaid) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice); provided, however,
that the absence of a return receipt shall not constitute irrebuttable evidence
that the notice or communication was not so mailed:
(a) if to Maxim, to:
The Maxim Group, Inc.
210 TownPark Drive
Kennesaw, Georgia 30144
Fax No.: 770/590-7709
Attention: A.J. Nassar, President and Chief Executive Officer
with a copy to:
Smith, Gambrell & Russell
Suite 1800
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326
Fax No.: 404/264-2652
Attention: A. Jay Schwartz, Esquire
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(b) if to Image, to:
Image Industries, Inc.
1112 Georgia Highway 140
Armuchee, Georgia 30105
Fax No.: 706/235-0386
Attention: H. Stanley Padgett, President
and Chief Executive Officer
with a copy to:
Parker, Johnson, Cook & Dunlevie
Suite 700
1275 Peachtree Street, N.E.
Atlanta, Georgia 30309
Fax No.: 404/888-7490
Attention: G. Donald Johnson, Esquire
SECTION 11.4 Interpretation. When a reference is made in this
Agreement to subsidiaries of Maxim, the Subsidiary or Image, the word
"subsidiaries" means any corporation more than 50% of the outstanding voting
securities of which are directly or indirectly owned by Maxim, the Subsidiary
or Image, as the case may be. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.5 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
SECTION 11.6 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof; (b) is not intended to confer upon any third parties any rights or
remedies hereunder, (c) shall not be assigned by operation of law or otherwise;
and (d) shall be governed in all respects, including validity, interpretation
and effect, by the laws of the State of Georgia (except for the Articles of
Merger attached hereto as Exhibit A, which shall be governed by the laws of
the State of Delaware). This Agreement may be executed in counterparts which
together shall constitute a single agreement.
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SECTION 11.7 Schedules and Exhibits. All Schedules and Exhibits
attached hereto are incorporated herein by reference. Each Disclosure Schedule
shall be deemed to be a representation and warranty of the party preparing such
schedule. No item shall be deemed disclosed for any schedule or
representation, unless specifically referenced on said schedule, and reference
on one schedule shall not be deemed disclosure for any other purpose.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized all as of the
date first-above written.
THE MAXIM GROUP, INC.
By: /s/ A. J. Nassar
----------------------------------------
A. J. Nassar
Its: President and Chief Executive Officer
IMAGE INDUSTRIES, INC.
By: /s/ H. Stanley Padgett
----------------------------------------
H. Stanley Padgett
Its: President and Chief Executive Officer
TMG-II MERGER, INC.
By: /s/ A. J. Nassar
----------------------------------------
A. J. Nassar
Its: President and Chief Executive Officer
46
