<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
July 31, 1996 0-22232
THE MAXIM GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-2060334
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
210 TownPark Drive, Kennesaw, Georgia 30144
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 590-9369
-----------------------------
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the last 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date:
Common Stock, $.001 par value 12,473,580
- ----------------------------------- ------------------------------
Class Outstanding at September 6, 1996
<PAGE> 2
Part I. FINANCIAL INFORMATION
Item 1 - Financial Statements
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
July 31, January 31,
Assets 1996 1996
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents, including restricted cash of
$480,295 at July 31, 1996 and $1,027,607 at
January 31, 1996, respectively $ 3,258,157 $ 4,161,866
Current portion of franchise license fees receivable, net
of allowance for doubtful accounts of $484,864 at
July 31, 1996 and $175,041 at January 31, 1996 2,179,260 1,893,949
Trade accounts receivable, net of allowance for doubtful
accounts of $1,308,146 at July 31, 1996 and
$1,475,432 at January 31, 1996 15,968,111 12,801,523
Accounts receivable from officers and employees 687,854 614,230
Current portion of notes receivable from franchisees and
related parties 239,411 1,008,455
Inventories 15,819,278 14,862,142
Refundable income taxes 1,377,446 2,176,348
Deferred income taxes 438,688 1,319,963
Prepaid expenses 2,219,203 1,039,317
------------ ------------
Total current assets 42,187,408 39,877,793
Property and equipment, net 17,963,051 17,858,534
Franchise license fees receivable, less current portion,
net of allowance for doubtful accounts of $210,000
at July 31, 1996 and $210,000 at January 31, 1996 1,583,268 2,091,361
Notes receivable from franchisees, less current portion 42,632 0
Deferred license fee, net of accumulated amortization 0 340,553
Intangible assets, net of accumulated amortization of
$924,743 at July 31, 1996 and $698,694
at January 31, 1996 8,670,172 8,859,611
Deferred income taxes 1,758,762 611,973
Other assets 872,729 331,413
------------ ------------
$ 73,078,022 $ 69,971,238
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 2 -
<PAGE> 3
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets, Continued
(unaudited)
<TABLE>
<CAPTION>
July 31, January 31,
Liabilities and Stockholders' Equity 1996 1996
---- ----
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 1,031,766 $ 903,382
Current portion of capital lease obligations 366,838 356,876
Rebates payable to franchisees 3,291,254 3,672,783
Accounts payable 7,220,328 6,919,836
Accrued expenses 5,494,097 5,029,277
Deferred revenue 1,768,032 1,284,254
Deposits 3,114,899 2,075,988
------------ -----------
Total current liabilities 22,287,214 20,242,396
Long-term debt, less current portion 27,914,168 28,159,336
Capital lease obligations, less current portion 1,743,984 1,908,843
------------ -----------
Total liabilities 51,945,366 50,310,575
------------ -----------
Stockholders' equity:
Preferred stock - $.001 par value. Authorized 1,000,000
shares; no shares issued or outstanding - -
Common stock - $.001 par value. Authorized 15,000,000
shares; issued and outstanding 7,233,995 at July 31, 1996
and 7,129,895 at January 31, 1996 7,234 7,130
Additional paid-in capital 21,485,087 20,591,591
Treasury stock, at cost; 28,000 shares (336,000) -
Accumulated deficit (23,665) (938,058)
------------ -----------
Total stockholders' equity 21,132,656 19,660,663
Commitments and contingencies (note 4)
------------ -----------
$ 73,078,022 $69,971,238
============ ===========
</TABLE>
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<PAGE> 4
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
July 31, June 30,
------------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Sales of floorcovering products $ 28,942,351 $ 23,515,224
Franchise license fees and royalties 1,352,180 1,449,453
Fees from brokering floorcovering products 2,987,676 1,470,755
Advertising fees, net of direct costs 2,810,270 1,061,494
Other 344,900 492,454
-------------- --------------
Total revenues 36,437,377 27,989,380
Cost of sales 23,117,493 16,015,375
-------------- --------------
Gross profit 13,319,884 11,974,005
Selling, general, and administrative expenses 13,184,871 10,338,386
-------------- --------------
Operating income 135,013 1,635,619
-------------- --------------
Other income (expense):
Interest income 177,766 101,801
Interest expense (659,677) (304,422)
Other 192,943 124,189
-------------- --------------
(288,968) (78,432)
-------------- --------------
(Loss) earnings before income taxes (153,955) 1,557,187
Income tax (benefit) expense (61,582) 638,197
-------------- --------------
Net (loss) earnings $ (92,373) $ 918,990
============== ==============
(Loss) earnings per common and common equivalent share $ (.01) $ .13
============== ==============
Weighted average number of common and common
equivalent shares outstanding 7,169,058 7,302,413
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 4 -
<PAGE> 5
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31, June 30,
------------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Sales of floorcovering products $ 56,071,467 $ 44,327,079
Franchise license fees and royalties 2,803,679 3,138,702
Fees from brokering floorcovering products 4,959,879 2,761,861
Advertising fees, net of direct costs 5,298,227 1,708,754
Other 958,983 839,266
-------------- --------------
Total revenues 70,092,235 52,775,662
Cost of sales 43,128,899 30,296,829
-------------- --------------
Gross profit 26,963,336 22,478,833
Selling, general, and administrative expenses 24,876,128 20,461,466
-------------- --------------
Operating income 2,087,208 2,017,367
-------------- --------------
Other income (expense):
Interest income 310,602 210,290
Interest expense (1,247,778) (761,556)
Other 373,956 348,886
-------------- --------------
(563,220) (202,380)
-------------- --------------
Earnings before income taxes 1,523,988 1,814,987
Income tax expense 609,595 672,303
-------------- --------------
Net earnings $ 914,393 $ 1,142,684
============== ==============
Earnings per common and common equivalent share $ .12 $ .16
============== ==============
Weighted average number of common and common
equivalent shares outstanding 7,477,282 7,336,523
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 5 -
<PAGE> 6
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31, June 30,
------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 914,393 $ 1,142,684
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,710,476 673,869
Bad debt provision 250,000 310,000
Deferred income taxes (benefit) (265,514) 539,458
Changes in assets and liabilities:
Increase in receivables (2,541,018) (2,352,099)
Increase in inventories (957,136) (1,701,630)
Decrease (increase) in refundable income taxes 798,902 (13,098)
(Increase) decrease in prepaid expenses and
other assets (1,721,202) 635,723
Increase (decrease) in rebates and accounts payable,
accrued expenses, deferred revenue, and deposits 1,906,472 (929,777)
----------- -----------
Net cash provided by (used in) operating activities 95,373 (1,694,870)
----------- -----------
Cash flows from investing activities:
Capital expenditures (1,285,001) (5,451,992)
Acquisitions, net of cash acquired - (2,923,439)
----------- -----------
Net cash used in investing activities (1,285,001) (8,375,431)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of warrants and options, net 893,600 137,574
Purchase of underwriter's warrants - (1,503,200)
Purchase of treasury stock (336,000) -
Net (payments) proceeds from additional long-term debt (116,784) 10,733,095
Principal payments on capital lease obligations (154,897) (178,301)
----------- -----------
Net cash provided by financing activities 285,919 9,189,168
----------- -----------
Net decrease in cash (903,709) (881,133)
Cash, beginning of period 4,161,866 2,842,920
----------- -----------
Cash, end of period $ 3,258,157 $ 1,961,787
=========== ===========
</TABLE>
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<PAGE> 7
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows, Continued
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31, June 30,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,201,528 $ 832,430
=========== ===========
Income taxes $ 100,000 $ 525,000
=========== ===========
Supplemental disclosures of noncash investing and
financing activities:
Common stock issued in connection with
acquisitions $ - 5,070,110
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 7 -
<PAGE> 8
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(1) Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's 1996
Transition Report on Form 10-K as filed with the Securities and Exchange
Commission, which includes consolidated financial statements for the ten
month period ended January 31, 1996.
The condensed consolidated financial statements give retroactive effect to
the merger of the Company and GCO, Inc. on September 28, 1994, which was
accounted for as a pooling-of-interests.
The results of operations for the periods presented are not necessarily
indicative of the operating results for the full year.
The Company changed its year-end to January 31 from March 31. The prior
year quarter (June 30, 1995) has not been restated to conform to the new
quarter-end (July 31, 1996).
(2) Related Party Transactions
Certain of the stockholders also own franchisees which utilize the services
of the Company. Trade accounts receivable at July 31, 1996 and January 31,
1996 include amounts due from these affiliated companies of $41,013 and
$85,344, respectively. In addition, rebates payable to franchisees at July
31, 1996 and January 31,1996 include amounts due to director-owned
franchisees of $65,886 and $25,975, respectively.
Included in fees from brokering floor covering products for the three month
periods ended July 31, 1996 and June 30, 1995 is $12,705 and $18,049,
respectively, and $27,066 and $35,007 for the six month period ended July
31, 1996 and June 30, 1995, respectively, earned from services provided to
these affiliated franchisees. Included in advertising revenue for the
three month periods ended July 31, 1996 and June 30, 1995 is $63,971 and
$50,627, respectively, and $74,904 and $105,785 for the six month periods
ended July 31, 1996 and June 30, 1995, respectively, earned from services
purchased by affiliated
- 8 -
<PAGE> 9
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(2) Related Party Transactions (cont.)
franchisees. Sales to affiliated franchisees of floorcovering products
for the three month periods ended July 31, 1996 and June 30,1995 was
$8,078 and $64,057, respectively, and $24,429 and $150,108 for the six
month periods ended July 31, 1996 and June 30, 1995, respectively.
In August 1995, the Company loaned $820,987 to Kevodrew Realty, Inc.
("Kevodrew") a company controlled by A.J. Nassar, the President and Chief
Executive Officer of the Company, which loan accrued interest at an annual
rate of prime. These funds were loaned to Kevodrew to provide interim
financing for the purchase by Kevodrew of a retail shopping center in
Louisville, Kentucky. This loan was repaid on May 22, 1996. A primary
tenant in the shopping center is a Company-owned store, which has
entered into a five-year lease agreement with Kevodrew providing for
annual lease payments of $89,155.
As of July 31, 1996 Mr. Nassar owed the Company a total of $ 623,416.
(3) Acquisitions
On June 26, 1996 the Company issued a nonbinding letter of intent to
acquire Classic Tile & Ceramics and Flint's Carpet Center. Both
companies, which are under common ownership, operate out of two locations
in Albuquerque, New Mexico. Annual revenues for the combined operation
are approximately $8 million. The nonbinding letter of intent is subject
to the execution of a definitive purchase agreement and approval of the
board of directors of each company.
(4) Subsequent Events
On August 22, 1996 the Company terminated negotiations to acquire all of
the outstanding stock of Manasota Carpet, Inc. based in Bradenton, Florida.
The Company had previously entered into a non-binding letter of intent to
acquire Manasota Carpet.
- 9 -
<PAGE> 10
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(4) Subsequent Events (cont.)
On August 30, 1996 the Company merged with Image Industries, Inc.
("Image") in a one for one exchange of the common stock of the Company
for the issued and outstanding common stock of Image. Image, which will be
operated as a wholly-owned subsidiary of the Company, is a recycler of
PET (polyethylene terephthalate) post consumer plastics which it converts
into PET flake, PET pellet, and polyester fiber, most of which is
consumed internally to produce carpet for the residential market. The
merger with Image will be accounted for under the pooling-of-interests
method of accounting and, accordingly, the Company's historical
consolidated financial statements will be restated in future periods to
include the accounts and results of operations of Image.
The combined results of operations by the separate companies are presented
below (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 31, 1996 June 30, 1995 July 31, 1996 June 30, 1995
------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Revenues:
Maxim $ 36,437 27,989 $ 70,092 52,776
Image 39,644 35,565 79,231 70,054
------ ------ ------- -------
Combined 76,081 63,554 149,323 122,830
====== ====== ======= =======
Net (Loss) Earnings:
Maxim (92) 919 914 1,143
Image 15 1,676 161 3,336
------ ------ ------- -------
Combined $ (77)* 2,595 $ 1,075* 4,479
====== ====== ======= =======
</TABLE>
* The Company incurred, subsequent to period end, a nonrecurring charge
of approximately $4,450,000, ($3,278,000 net of tax benefit) representing
transaction expenses and other costs associated with the merger with
Image. These costs will be recorded as expenses during the three months
ended October 31, 1996.
On August 30, 1996 the Company closed on a commitment from First Union
National Bank for credit facilities totaling $125 million. The facility
was executed in conjunction with the merger of the Company and Image
completed on August 30, 1996. Proceeds were used to refinance the
existing debt of the Company and Image and will provide the Company with
working capital.
- 10 -
<PAGE> 11
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(4) Subsequent Events (cont.)
On September 5, 1996 the Company issued a non-binding letter of intent to
acquire Bailey & Roberts Flooring, Inc., which is engaged in the specified
contract segment of the floorcovering industry. Bailey & Roberts,
headquartered in Knoxville, Tennessee, generates annual sales of
approximately $14 million. The acquisition is subject to the execution of
a definitive purchase agreement and approval of both boards of directors.
- 11 -
<PAGE> 12
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
On August 30, 1996 the Company merged with Image Industries, Inc. ("Image"), in
a one for one exchange of the common stock of the Company for the issued and
outstanding common stock of Image. Image will operate as a wholly owned
subsidiary of the Company and continue to operate as a carpet manufacturer and
PET recycler. The acquisition of Image will be accounted for under the
pooling-of-interests method of accounting and, accordingly, the Company's
historical consolidated financial statements will be restated to include the
accounts and results of operations of Image. See Item 5. Other Information
for a presentation of the results of the combined companies.
Results of Operations
Total Revenues
The following table sets forth data with respect to total revenues (dollars in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
<S> <C> <C>
June 30, 1995 $ 27,989 $ 52,776
July 31, 1996 36,437 70,092
-------- --------
Change $ 8,448 $ 17,316
======== ========
Percentage 30.2% 32.8%
</TABLE>
Total revenues for the second quarter of fiscal 1997 and the six months ended
July 31, 1996 increased 30.2% & 32.8%, respectively. The components of the
increases are discussed below.
Retail Sales of Floorcovering Products
The following table sets forth data with respect to sales of floorcovering
products (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
<S> <C> <C>
June 30, 1995 $ 23,515 $ 44,327
July 31, 1996 28,942 56,071
-------- --------
Change $ 5,427 $ 11,744
======== ========
Percentage 23.0% 26.5%
</TABLE>
The growth in revenues from retail sales of floorcovering products largely
reflects the impact of the acquisitions of floorcovering retailers during
fiscal 1996 and their associated direct sales of floorcovering products.
- 12 -
<PAGE> 13
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Results of Operations (Continued)
Franchise License Fees and Royalties
The following table sets forth data with respect to franchise license fees and
royalties (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
<S> <C> <C>
June 30, 1995 $ 1,449 $ 3,139
July 31, 1996 1,352 2,804
------- -------
Change $ (97) $ (335)
======= =======
Percentage (6.7)% (10.7)%
</TABLE>
Franchise license fees decreased due to fewer CARPETMAX franchise licenses being
sold in the periods, which was slightly offset by an increase in royalties
collected on the revenues of GCO franchisees.
Fees from Franchise Services
The following table sets forth data with respect to fees from franchise
services (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
<S> <C> <C>
June 30, 1995 $ 3,025 $ 5,310
July 31, 1996 6,143 11,217
------- -------
Change $ 3,118 $ 5,907
======= =======
Percentage 103.1% 111.2%
</TABLE>
The increase in fees from franchise services, which includes brokering of
floorcovering products and advertising, is attributable to increases in buying
activity generated from new CARPETMAX franchisees, growth in product demand
from existing CARPETMAX franchisees, greater utilization of advertising
services by franchisees and an expansion of services offered by the advertising
division.
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<PAGE> 14
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Results of Operations (Continued)
Gross Profit
Gross profit margins were 36.6% for the second quarter of fiscal 1997
compared to 42.8% for the quarter ended June 30, 1995. Gross profit margins
were 38.5% for the six months ended July 31, 1996 compared to 42.6% for the six
months ended June 30, 1995. The compression in gross margins is primarily a
result of the continuing change in the business mix of the Company (which
relied primarily on brokering, license, and royalty fees) to a revenue base
consisting principally of the net sales of Company-owned stores.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the second quarter of fiscal
1997 increased 27.5% compared to the quarter ended June 30, 1995. For
the six months ended July 31, 1996, selling, general and administrative
expenses increased 21.6% compared to the six months ended June 30, 1995.
Increases in operating expenses reflects an overall growth in the size of the
operations required to serve the growing retail base as well as expenses
associated with the opening of new Company-owned stores.
Other Income (Expense)
The increase in interest expense in the three and six months ending July 31,
1996 over the comparable periods ended June 30, 1995 was due primarily to debt
incurred to fund acquisitions and increased working capital.
Income Taxes
The Company reported an income tax benefit for the second quarter of fiscal
1997 of $61,582 compared to an expense of $638,197 for the three months ended
June 30, 1995. The Company recorded tax expense of $609,595 for the six months
ended July 31, 1996 compared to an expense of $672,303 for the six months ended
June 30, 1995. The Company's effective tax expense rate for the six months
ended July 31, 1996 and June 30, 1995 was 40.0% and 37.0%, respectively. The
change in effective rates reflect the impact of nondeductible expenses with
lower earnings.
- 14 -
<PAGE> 15
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Results of Operations (Continued)
Net (Loss) Earnings
The Company recorded a net loss and loss per share of $(92,373) and $(.01),
respectively, for the second quarter of fiscal 1997 compared to net earnings
and earnings per share of $918,990 and $.13, respectively, for the three months
ended June 30, 1995. The Company's loss for the quarter was due to costs
incurred with the opening of new stores in Las Vegas, Nevada, as well as
nonreoccurring costs related to the hiring of a Chief Operating Officer and a
reorganization of the Company's subsidiaries for state tax planning. The net
earnings and earnings per share for the six months ended July 31, 1996 was
$914,393 and $.12, respectively, compared to net earnings and earnings per
share of $1,142,684 and $.16, respectively, for the six months ended June 30,
1995.
Liquidity and Capital Resources
The Company's primary capital requirements are for acquisitions, working
capital, new store openings and other capital expenditures. The Company
historically has met its capital requirements through a combination of equity
transactions, cash flow from operations, bank lines of credit and credit terms
from suppliers.
Credit Facilities
On August 30, 1996 the Company closed on a commitment from First Union National
Bank for a credit facility totaling $125 million. The Facility was executed in
conjunction with the merger of Maxim and Image, completed on August 30, 1996.
Proceeds were used to refinance the existing debt of both Maxim and Image and
to provide the Company with additional working capital. As of September 6,
1996, $89 million was outstanding under this credit facility at an average
interest rate of 8.5%.
As of August 30, 1996 the Company also has approximately $360,000 in principal
outstanding under various term loans at interest rates ranging from 5.9% to
10.5%.
Cash Flows
During the first six months of fiscal 1997, operating activities provided
$95,373 compared to a use of $1,694,870 for the six months ended June 30, 1995.
The increase in cash provided by operating activities resulted primarily from
a decrease in inventories, an increase in depreciation and amortization, and an
increase in current liabilities which was offset by an increase in prepaid and
other current assets.
During the first six months of fiscal 1997, investing activities used
$1,285,001 compared to $8,375,431 for the six months ended June 30, 1995. The
decrease is primarily due to a decrease in acquisitions during fiscal 1997 and
the completion of a new main office/distribution facility in fiscal 1996.
During the first six months of fiscal 1997, financing activities provided cash
of $285,919 compared to cash provided of $9,189,168 in the prior year period.
This decrease is primarily due to a decrease in borrowings from the credit
facility during the fiscal 1997 period.
- 15 -
<PAGE> 16
PART II. OTHER INFORMATION
Item 5. Other Information
As noted earlier, on August 30,1996, the Company merged with Image. The
acquisition will be accounted for under the pooling-of-interests method of
accounting, and, accordingly, the Company's historical consolidated financial
statements will be restated in future periods to include the accounts and
results of operations of Image.
The combined financial statements of the Company and Image are presented below:
- 16 -
<PAGE> 17
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Maxim and Image Supplemental Combined Financial Information
Condensed Combined Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
July 31, January 31,
Assets 1996 1996
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents, including restricted cash of
$480,295 at July 31, 1996 and $1,027,607 at
January 31, 1996, respectively $ 3,464,113 $ 4,206,833
Current portion of franchise license fees receivable, net
of allowance for doubtful accounts of $484,864 at
July 31, 1996 and $175,041 at January 31, 1996 2,179,260 1,893,949
Trade accounts receivable, net of allowance for doubtful
accounts of $1,449,109 at July 31, 1996 and
$1,735,484 at January 31, 1996 38,392,351 33,037,147
Accounts receivable from officers and employees 687,854 614,230
Current portion of notes receivable from franchisees and
related parties 239,411 1,008,455
Inventories 43,967,439 49,170,427
Refundable income taxes 1,377,446 2,176,348
Deferred income taxes 2,177,121 2,079,963
Prepaid expenses 3,173,969 2,090,773
------------ ------------
Total current assets 95,658,964 96,278,125
Property and equipment, net 95,925,533 93,879,092
Franchise license fees receivable, less current portion,
net of allowance for doubtful accounts of $210,000
at July 31, 1996 and $210,000 at January 31, 1996 1,583,268 2,091,361
Notes receivable from franchisees, less current portion 42,632 0
Deferred license fee, net of accumulated amortization 0 340,553
Intangible assets, net of accumulated amortization of
$930,192 at July 31, 1996 and $702,867
at January 31, 1996 8,769,727 8,960,442
Other assets 1,966,016 535,035
------------ ------------
$203,946,140 $202,084,608
============ ============
</TABLE>
- 17 -
<PAGE> 18
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Maxim and Image Supplemental Combined Financial Information
Condensed Combined Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
July 31, January 31,
Liabilities and Stockholders' Equity 1996 1996
------------------------------------- ---- ----
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 1,043,879 $ 919,279
Current portion of capital lease obligations 531,372 556,449
Rebates payable to franchisees 3,291,254 3,672,783
Accounts payable 17,410,065 17,165,602
Accrued expenses 10,334,344 9,146,373
Deferred revenue 1,768,032 1,284,254
Deposits 3,114,899 2,075,988
------------ ------------
Total current liabilities 37,493,845 34,820,728
Long-term debt, less current portion 88,315,990 90,147,278
Capital lease obligations, less current portion 1,743,984 2,562,877
Deferred taxes 2,580,519 2,402,928
------------ ------------
Total liabilities 130,134,338 129,933,811
------------ ------------
Stockholders' equity:
Preferred stock - $.001 par value. Authorized 1,000,000
shares; no shares issued or outstanding - -
Common stock - $.001 par value. Authorized 25,000,000
shares; issued 12,500,280 at July 31, 1996
and 12,396,180 at January 31, 1996 12,500 12,396
Additional paid-in capital 61,313,554 60,392,029
Treasury stock, at cost; 28,000 shares (336,000) -
Retained earnings 12,821,748 11,746,372
------------ ------------
Total stockholders' equity 73,811,802 72,150,797
Commitments and contingencies
------------ ------------
$203,946,140 $202,084,608
============ ============
</TABLE>
- 18 -
<PAGE> 19
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Maxim and Image Supplemental Combined Financial Information
Condensed Combined Statements of Earnings
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
July 31, June 30,
------------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Sales of floorcovering products $ 60,881,330 $ 53,822,767
Fiber and PET sales 7,704,268 5,256,603
Franchise license fees and royalties 1,352,180 1,449,453
Fees from brokering floorcovering products 2,987,676 1,470,755
Advertising fees, net of direct costs 2,810,270 1,061,494
Other 344,900 492,454
------------- -------------
Total revenues 76,080,624 63,553,526
Cost of sales 55,672,049 42,857,923
------------- -------------
Gross profit 20,408,575 20,695,603
Selling, general, and administrative expenses 19,133,886 15,682,822
------------- -------------
Operating income 1,274,689 5,012,781
------------- -------------
Other income (expense):
Interest income 177,766 101,801
Interest expense (1,605,087) (960,687)
Other 176,448 116,495
------------- -------------
(1,250,873) (742,391)
------------- -------------
Earnings before income taxes 23,816 4,270,390
Income tax expense 100,819 1,675,580
------------- -------------
Net (loss) earnings $ (77,003) $ 2,594,810
============= ==============
(Loss) Earnings per common and common equivalent share $ (.01) $ .19
============= ==============
Adjusted net (loss) earnings (1) $ (3,355,003) $ 2,594,810
============= ==============
Adjusted (loss) earnings per common and common
equivalent share (1) $ (.25) $ .19
============= ==============
Weighted average number of common and common
equivalent shares outstanding 13,374,395 13,506,166
============= ==============
</TABLE>
- 19 -
<PAGE> 20
(1) Adjusted net earnings and adjusted net earnings per share amounts reflect
$4,450,000 ($3,278,000, net of tax benefit) in one time costs related to the
Image merger which will to be recorded in the third quarter of fiscal 1997.
- 20 -
<PAGE> 21
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Maxim and Image Supplemental Combined Financial Information
Condensed Combined Statements of Earnings
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31, June 30,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Sales of floorcovering products $ 117,626,984 104,645,739
Fiber and PET sales 17,674,991 9,735,179
Franchise license fees and royalties 2,803,679 3,138,702
Fees from brokering floorcovering products 4,959,879 2,761,861
Advertising fees, net of direct costs 5,298,227 1,708,754
Other 958,983 839,266
------------- -----------
Total revenues 149,322,743 122,829,501
Cost of sales 108,630,211 83,811,383
------------- -----------
Gross profit 40,692,532 39,018,118
Selling, general, and administrative expenses 36,258,614 30,752,567
------------- -----------
Operating income 4,433,918 8,265,551
------------- -----------
Other income (expense):
Interest income 310,602 210,290
Interest expense (3,212,823) (1,889,473)
Other 260,597 367,203
------------- -----------
(2,641,624) (1,311,980)
------------- -----------
Earnings before income taxes 1,792,294 6,953,571
Income tax expense 716,918 2,474,430
------------- -----------
Net earnings $ 1,075,376 4,479,141
============= ===========
Earnings per common and common equivalent share $ .08 $ .33
============= ===========
Adjusted net (loss) earnings (1) $ (2,202,905) $ 4,479,141
============= ===========
Adjusted (loss) earnings per common and common
equivalent share (1) $ (.17) $ .33
============= ===========
Weighted average number of common and common
equivalent shares outstanding 13,347,244 13,540,457
============= ===========
</TABLE>
- 21 -
<PAGE> 22
(1) Adjusted net earnings and adjusted net earnings per share amounts reflect
$4,450,000 ($3,278,000, net of tax benefit) in one time costs related to the
Image merger which will be recorded in the third quarter of fiscal 1997.
- 22 -
<PAGE> 23
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Maxim and Image Supplemental Combined Financial Information
Condensed Combined Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31, June 30,
---------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,075,376 4,479,141
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 5,535,665 2,911,464
Bad debt provision 300,000 310,000
Deferred income taxes 80,433 1,576,907
Changes in assets and liabilities:
Increase in receivables (4,779,634) (5,064,971)
Decrease (increase) in inventories 5,202,988 (13,272,823)
Decrease (increase) in refundable income taxes 798,902 (13,098)
(Increase) decrease in prepaid expenses and
other assets (2,514,177) 449,906
Increase in rebates and accounts payable,
accrued expenses, deferred revenue, and deposits 2,573,594 1,624,223
------------ -----------
Net cash provided by (used in) operating activities 8,273,147 (6,999,251)
------------ -----------
Cash flows from investing activities:
Capital expenditures (7,050,838) (23,901,415)
Acquisitions, net of cash acquired - (2,923,439)
------------ -----------
Net cash used in investing activities (7,050,838) (26,824,854)
------------ -----------
Cash flows from financing activities:
Proceeds from exercise of warrants and options, net 921,629 137,574
Purchase of underwriter's warrants - (1,503,200)
Purchase of treasury stock (336,000) -
Net (payments) proceeds from additional long-term debt (1,706,688) 34,513,209
Principal payments on capital lease obligations (843,970) (178,301)
------------ -----------
Net cash (used in) provided by financing activities (1,965,029) 32,969,282
------------ -----------
Net decrease in cash (742,720) (854,823)
Cash, beginning of period 4,206,833 3,002,531
------------ -----------
Cash, end of period $ 3,464,113 2,147,708
============ ===========
</TABLE>
- 23 -
<PAGE> 24
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Maxim and Image Supplemental Combined Financial Information
Condensed Combined Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31, June 30,
--------------------------
1996 1995
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 3,183,795 $ 1,923,347
============ ============
Income taxes $ 450,000 $ 1,805,000
============ ============
Supplemental disclosures of noncash investing and
financing activities:
Common stock issued in connection with
acquisitions $ - $ 5,070,110
============ ============
</TABLE>
- 24 -
<PAGE> 25
<TABLE>
<S> <C>
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
10.18 Credit Agreement dated as of August 30, 1996 by
and among The Maxim Group, Inc., and its Subsidiaries and
First Union National Bank of Georgia regarding $125 million
credit facility.
11 - Statements Regarding Computation of Per Share Earnings.
27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K. The following report on Form 8-K was filed during the
quarter ended July 31, 1996: Form 8-K dated May 31, 1996 announcing execution
of definitive merger agreement with Image Industries, Inc.
</TABLE>
- 25 -
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MAXIM GROUP, INC.
Dated: September 6, 1996 By: /s/ A.J. Nassar
------------------------------------
A.J. Nassar, President and Chief
Executive Officer
Dated: September 6, 1996 By: /s/ Gene Harper
------------------------------------
Gene Harper, Chief Financial Officer
- 26 -
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
<S> <C>
10.18 Credit Agreement dated as of August 30, 1996 by
and among The Maxim Group, Inc., and its Subsidiaries and
First Union National Bank of Georgia regarding $125 million
credit facility.
11 - Statements Regarding Computation of Per Share Earnings.
27 - Financial Data Schedule (for SEC use only).
</TABLE>
<PAGE> 1
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF AUGUST 30, 1996
BY AND AMONG
THE MAXIM GROUP, INC.
AND
CERTAIN OF ITS SUBSIDIARIES
AS BORROWERS,
THE LENDERS REFERRED TO HEREIN,
AND
FIRST UNION NATIONAL BANK OF GEORGIA,
AS ADMINISTRATIVE AGENT
<PAGE> 2
CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.3 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.4 Other Definitions and Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II
CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.1 Revolver Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.2 Procedure for Advances of Revolver Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.3 Swingline Loan Subfacility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.4 Repayment of Revolver Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.5 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.6 Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.7 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.8 Termination of Revolver Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.10 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.11 Maximum Borrower Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.12 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE III
GENERAL LOAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.4 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.5 Crediting of Payments and Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.6 Nature of Obligations of Lenders Regarding Loans; Assumption by Administrative Agent . . . . . . 38
SECTION 3.7 Changed Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.8 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.9 Capital Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV
CLOSING: CONDITIONS OF CLOSING AND BORROWING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.2 Conditions to Closing and Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.3 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BORROWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.2 Survival of Representations and Warranties, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.1 Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.2 Officer's Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.3 Accountants' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.4 Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.5 Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.6 Notice of Litigation and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.7 Accuracy of Information56
ARTICLE VII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.1 Preservation of Corporate Existence and Related Matters . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.2 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.4 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.5 Payment and Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.6 Compliance With Laws and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.7 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.8 Compliance with ERISA and the Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.9 Compliance With Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.10 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.11 Visits and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.13 Hedging Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII
FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.1 Funded Debt to Total Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.2 Funded Debt to EBITDAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.3 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.4 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.5 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.6 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.1 Limitations on Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.2 Limitations on Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.3 Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.4 Limitations on Loans, Advances, Investments and Acquisitions . . . . . . . . . . . . . . . . . . 62
SECTION 9.5 Limitations on Mergers and Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.6 Limitations on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.7 Limitations on Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.9 Certain Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.10 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.11 Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE X
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc. . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.4 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.5 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XI
THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.2 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.5 Non-Reliance on Administrative Agent and Other Lenders . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.6 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 11.8 The Administrative Agent in its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.4 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.5 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.6 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.7 Reversal of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.8 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.9 Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.10 Amendments, Waivers and Consents: Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.11 Performance of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.13 All Powers Coupled with Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.14 Survival of Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.15 Provision of Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.16 Titles and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.17 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.18 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.19 Maxim as Agent for Other Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.20 Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
iv
<PAGE> 6
PAGE
EXHIBITS
Exhibit A-1 - Form of Revolver Note
Exhibit A-2 - Form of Term A Note
Exhibit A-3 - Form of Term B Note
Exhibit A-4 - Form of Swingline Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Pledge Agreement
Exhibit G - Form of Security Agreement
Exhibit H - Form of Intercompany Subordination Agreement
Exhibit I - Form of Joinder Agreement
Exhibit J - Form of Borrowing Base Certificate
SCHEDULES
Schedule 1.1 - Lenders and Commitments
Schedule 5.1(a) - Jurisdictions of Organization and Qualification to Do
Business as Foreign Corporation
Schedule 5.1(b) - Subsidiaries and capitalization
Schedule 5.1(g) - Environmental Matters
Schedule 5.1(h) - ERISA Plans
Schedule 5.1(1) - Material Contracts
Schedule 5.1(m) - Labor and Collective Bargaining Agreements
Schedule 5.1(0) - Liabilities Not Reflected in Financial Statements
Schedule 5.1(r) - Real Property
Schedule 5.1(t) - Debt and Contingent Obligations
Schedule 5.1(u) - Litigation
Schedule 5.1(v) - Regulatory Matters
Schedule 9.1 - Existing Debt
Schedule 9.3 - Existing Liens
Schedule 9.4 - Existing Loans, Advances and Investments
** 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.**
v
<PAGE> 7
CREDIT AGREEMENT, dated as of the 30th day of August, 1996, by and
among THE MAXIM GROUP, INC., a corporation organized under the laws of Delaware
("Maxim"), IMAGE INDUSTRIES, INC., a corporation organized under the laws of
Delaware and a Wholly-Owned Subsidiary of Maxim ("Image"), certain other
Subsidiaries of Maxim identified on the signature pages hereto (together with
Maxim and Image, the "Borrowers"), the financial institutions who are or may
become party hereto (the "Lenders"), and FIRST UNION NATIONAL BANK OF GEORGIA,
a national banking association ("First Union"), as Administrative Agent for the
Lenders.
STATEMENT OF PURPOSE
The Borrowers have requested that First Union and the Lenders provide
the credit facilities hereunder. The parties have agreed that the credit
facilities are to be governed by the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
covenants and provisions herein contained and for TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrowers, the Lenders and First Union hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. In addition to the terms defined above and
the terms defined elsewhere herein, the following terms when used in this
Agreement shall have the meanings assigned to them below:
"Account Debtor" means any Person who is or may become obligated on or
under an Account.
"Accounts" means, with respect to Maxim and its Subsidiaries, without
duplication, all (a) accounts receivable, contract rights, book debts, notes,
drafts and other obligations and indebtedness arising from the sale, lease or
exchange of goods or other property and/or the performance of services in the
ordinary course of business, (b) rights in, to and under all purchase orders
for goods, services or other property, (c) rights to any goods, services or
other property represented by any of the foregoing (including returned or
repossessed goods and unpaid sellers' rights of rescission, replevin,
reclamation and rights to stoppage in transit), (d) monies due or to become due
under all contracts for the sale, lease or exchange of goods or other property
and/or the performance of services (whether or not yet earned by performance),
and (e) proceeds of any of the foregoing and all collateral security and
guaranties of any kind given by any Person with respect to any of the
foregoing.
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"Accounts Designation Letter" means the letter executed by each of the
Borrowers, delivered on the Closing Date and from time to time thereafter,
designating the accounts of Maxim or the other Borrowers to which proceeds of
Revolver Loans are to be disbursed and authorizing the Administrative Agent to
disburse such proceeds to such accounts.
"Administrative Agent" means First Union in its capacity as
administrative agent hereunder, and any successor thereto appointed pursuant to
Section 11.9.
"Administrative Agent's Office" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
12.1.
"Affiliate" means, with respect to any Person, any other Person (other
than a Subsidiary of such Person) which directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such Person. The term "control" means (a) the power to vote ten percent
(10%) or more of the securities or other equity interests of a Person having
ordinary voting power, or (b) the possession, directly or indirectly, of any
other power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities, by contract or
otherwise.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced at any time or from time
to time pursuant to this Agreement. On the Closing Date, the Aggregate
Commitment shall be One Hundred Twenty-Five Million Dollars ($125,000,000).
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time.
"Applicable Law" means all applicable provisions of constitutions,
laws, statutes, treaties, rules, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
3.1(a).
"Assignment and Acceptance" shall have the meaning assigned thereto
in Section 12.9(a).
"Avoidance Provisions" shall have the meaning assigned thereto in
Section 2.11(a).
"Bankruptcy Code" means the U.S. Bankruptcy Code, 11 U.S.C. Section
101 et seq., as amended.
"Base Rate" means, at any time, the higher of (a) the Prime Rate
or (b) the Federal Funds Rate as determined by the Administrative Agent plus
1/2 of 1%; each change in the Base Rate shall take effect simultaneously with
the corresponding change or changes in the Prime Rate or the Federal Funds
Rate.
"Base Rate Loan" means any Loan bearing interest at a rate determined
with reference to the Base Rate as provided in Section 3.1(a) hereof.
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<PAGE> 9
"Benefitted Lender" shall have the meaning assigned thereto in Section
10.5.
"Borrowers" shall have the meaning assigned thereto in the preamble
hereof.
"Borrowing Base" means, at any date of determination, an amount equal
to the lesser of (a) $65,000,000, less the aggregate LOC Obligations at such
date, and less such reserves as the Administrative Agent in its discretion
elects to establish from time to time; or (b) an amount equal to (i)
eighty-five percent (85%) (or such lesser percentage as the Required Lenders
may in their discretion determine from time to time) of the net amount of
Eligible Accounts of the Borrowers outstanding at such date, plus (ii) forty
percent (40%) (or such lesser percentage as the Required Lenders may in their
discretion determine from time to time) of the value of Eligible Inventory of
the Borrowers at such date, calculated on the basis of the lower of cost or
market and calculated on a first-in, first-out basis, less (iii) an amount
equal to the sum of (A) any amounts which Borrower is obligated to pay but does
not pay when due and which the Administrative Agent or any Lender pays pursuant
to any of the Loan Documents for the account of the Borrowers, (B) any amount
of past due rent or other charges payable by any of the Borrowers to any
landlord or warehouseman of premises where any of the Collateral is located,
(C) the aggregate LOC Obligations at such date and (D) such reserves as the
Required Lenders in their reasonable discretion establish from time to time.
For purposes hereof, the net amount of Eligible Accounts at any time shall be
the face amount of such Eligible Accounts less any and all returns, rebates,
discounts (which may, at the Administrative Agent's option, be calculated on
shortest terms), credits, allowances, sales or excise taxes of any nature at
any time issued, owing, claimed by the account debtors thereon, granted,
outstanding or payable in connection with such Accounts at such time. Unless
the Administrative Agent shall otherwise agree, Eligible Accounts and Eligible
Inventory shall not include the Accounts or Inventory of any Subsidiaries of
any of the Borrowers which are not Borrowers hereunder or any other Accounts or
Inventory as to which a Borrower is not the sole owner.
"Borrowing Base Certificate" means the certificate delivered from time
to time by Maxim, on behalf of the Borrowers, pursuant to Section 6.4.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina are open for the conduct of their
commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and
that is also a day for trading by and between banks in deposits in the London
interbank market.
"Capital Asset" means, with respect to Maxim and its Subsidiaries, any
asset that would, in accordance with GAAP, be required to be classified and
accounted for as a capital asset on a Consolidated balance sheet of Maxim and
its Subsidiaries.
"Capital Expenditures" means, with respect to Maxim and its
Subsidiaries for any period, the aggregate cost of all Capital Assets acquired
by Maxim and its Subsidiaries during such period, determined in accordance with
GAAP.
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<PAGE> 10
"Capital Lease" means, with respect to Maxim and its Subsidiaries, any
lease of any property that would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on a Consolidated balance sheet
of Maxim and its Subsidiaries.
"Cash Collateral Account" shall have the meaning assigned thereto in
Section 2.5(a).
"Change in Control" means (i) any person or group of persons shall
obtain beneficial ownership or control (within the meaning of Section 13(d)(3)
of the Exchange Act) in one or more series of transactions of more than thirty
percent (30%) of the common stock of Maxim or more than thirty percent (30%) of
the voting power of shareholders of Maxim entitled to vote in the election of
members of the board of directors of Maxim, (ii) during any period of twenty-
four consecutive months, individuals who at the beginning of such period
constituted the board of directors of Maxim (together with any new directors
whose election by such board of directors or whose nomination for election by
the stockholders of Maxim was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the members of the board of
directors of Maxim, (iii) there shall have occurred under any indenture or
other instrument evidencing any Debt any "change in control" (as defined in
such indenture or other evidence of Debt) obligating Maxim to repurchase,
redeem or repay all or any part of the Debt or capital stock provided for
therein, or (iv) except as permitted in Section 9.5, any of the Borrowers shall
cease to be a Wholly-Owned Subsidiary of Maxim.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Collateral" means any assets pledged by any of the Borrowers or any
of their Subsidiaries to the Administrative Agent for the ratable benefit of
itself and the Lenders in order to secure the Obligations or a portion thereof.
"Commitment" means the commitment of a Lender to make Loans hereunder.
"Commitment Percentage" means, with respect to any Lender, the ratio
of (a) the amount of the Commitment of such Lender to (b) the aggregate
Commitments of all Lenders.
"Consolidated" means, when used with reference to financial statements
or financial statement items of Maxim and its Subsidiaries, such statements or
items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Contributing Borrower" shall have the meaning assigned thereto in
Section 2.11(d).
"Contingent Obligation" means, with respect to Maxim and its
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other obligation of any other Person and,
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<PAGE> 11
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of any such Person (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement condition or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided, that the term
Contingent Obligation shall not include (i) customary indemnification
obligations provided in connection with previously- consummated acquisition or
sale transactions or provided in connection with future acquisition or sale
transactions consummated in compliance with the terms of this Agreement or (ii)
endorsements for collection or deposit in the ordinary course of business.
"Credit Facilities" means the collective reference to the Revolver
Facility, the Term A Loan and the Term B Loan.
"Debt" means, with respect to Maxim and its Subsidiaries, at any date
and without duplication, the sum, calculated in accordance with GAAP, of (a)
all liabilities, obligations and indebtedness for borrowed money including but
not limited to obligations evidenced by bonds, debentures, notes or other
similar instruments of any such Person, (b) all obligations to pay the deferred
purchase price of property or services of any such Person, except trade
payables arising in the ordinary course of business not more than ninety (90)
days past due or, if more than ninety (90) days past due, being contested by
such Person in good faith, (c) all obligations of any such Person as lessee
under Capital Leases, (d) all Debt of any other Person secured by a Lien on any
asset of any such Person, (e) all obligations, contingent or otherwise, of any
such Person relative to the face amount of letters of credit, whether or not
drawn, and banker's acceptances issued for the account of any such Person, (f)
all Contingent Obligations of such Person, (g) all obligations to redeem,
repurchase, exchange, defease or otherwise make payments in respect of capital
stock or other securities of such Person and (h) all termination payments which
would be due and payable by any such Person pursuant to a Hedging Agreement.
"Debt to EBITDAR Ratio" shall have the meaning assigned thereto in
Section 8.2.
"Default" means any of the events specified in Section 10.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDAR" means, with respect to Maxim and its Subsidiaries, for any
period of calculation and without duplication, (i) Net Income for such period,
plus (ii) Interest Expense paid or accrued but not paid during such period,
plus (iii) income tax expense paid during such period, plus (iv) amortization
and depreciation expense deducted during such period in calculating Net Income,
plus (v) real and personal property rental expense paid during such period.
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"Eligible Account" means, with respect to Maxim and its Subsidiaries,
without duplication, an Account arising in the ordinary course of business from
the sale of Inventory or rendition of services which is at all times subject to
a duly perfected, first-priority security interest in favor of the
Administrative Agent, for the benefit of the Lenders, and to no other Lien, and
which the Required Lenders, in their sole discretion, deem to be an Eligible
Account. Without limiting the generality of the foregoing, no Account is to be
an Eligible Account if (i) it arises out of a sale made by any Borrower to
Maxim or any of its Subsidiaries or an Affiliate of any of them or to a Person
controlled by an Affiliate of Maxim or any of its Subsidiaries, (ii) it is
unpaid for more than sixty (60) days after the original due date shown on the
invoice or is due or unpaid more than one hundred twenty (120) days after the
original invoice date, (iii) fifty percent (50%) or more of the Accounts from
the Account Debtor are not deemed Eligible Accounts hereunder, (iv) the total
unpaid Accounts of the Account Debtor exceed twelve and one-half percent (12
1/2%) of the net amount of all Accounts of the Borrowers, to the extent of such
excess, (v) any covenant, representation or warranty contained in this
Agreement or any of the Security Documents with respect to such Account has
been breached, (vi) the Account Debtor is also a creditor or supplier of any
Borrower, or has disputed liability with respect to such Account, or the
Account otherwise is or may become subject to any right of setoff by the
Account Debtor, to the extent of the amount of any offset, dispute or claim,
except for consensual offsets and credits in the ordinary course of business
with respect to Accounts not exceeding $2,000,000 in the aggregate or $500,000
for any single Account Debtor; (vii) the Account Debtor has commenced a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having jurisdiction in
the premises in respect of the Account Debtor in an involuntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
petition or other application for relief under the federal bankruptcy laws has
been filed against the Account Debtor, or if the Account Debtor has failed,
suspended business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for all or
a significant portion of its assets or affairs, (viii) it arises from a sale to
an Account Debtor outside the United States, unless the sale is on letter of
credit, guaranty or acceptance terms, in each case acceptable to the
Administrative Agent in its discretion, (ix) it arises from a sale to the
Account Debtor on a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or return basis or the
Account otherwise does not represent a final sale, (x) the Administrative Agent
believes, in its discretion, that collection of such Account is insecure or
that payment thereof is doubtful or will be delayed by reason of the Account
Debtor's financial condition, (xi) the Account Debtor is the United States of
America or any department, agency or instrumentality thereof, unless the
applicable Borrower assigns its right to payment of such Account to the
Administrative Agent, for the benefit of Lenders, in form and substance
satisfactory to the Administrative Agent, so as to comply with the Assignment
of Claims Act of 1940, as amended, (xii) the Account Debtor is located in the
State of New Jersey, the State of Minnesota, or the State of Indiana, unless
the applicable Borrower either has qualified to transact business in such State
or has filed a Notice of Business Activities Report with the appropriate
officials in such State for the then current year, (xiii) the Account Debtor is
located in a state in which the applicable Borrower is deemed to be doing
business under the laws of such state and which denies creditors access to its
courts in the absence of qualification to transact business in such state or of
the filing of any reports with such state, unless the applicable Borrower has
qualified as a foreign corporation authorized to transact business in such
state or has filed all
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required reports, (xiv) the Account is subject to a Lien other than the Lien in
favor of the Administrative Agent, for the benefit of the Lenders, (xv) the
total unpaid Accounts of the Account Debtor exceed a credit limit determined by
the Administrative Agent, in its reasonable discretion, to the extent such
Account exceeds such limit, (xvi) the Account is evidenced by chattel paper or
an instrument of any kind, or has been reduced to judgment, (xvii) the
applicable Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made in the
ordinary course of business for prompt payment and which discounts or
allowances are reflected in the Borrowing Base Certificate calculation of the
face value of each invoice related to such Account, (xviii) the applicable
Borrower has made an agreement with the Account Debtor to extend the time of
payment thereof, or (xix) the Account arises from a retail sale of goods to a
Person who is purchasing same primarily for personal, family or household
purposes.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of
any other country that is a member of the Organization for Economic Cooperation
and Development or any successor thereto (the "OECD") or a political
subdivision of any such country and having total assets in excess of
$1,000,000,000, provided that such bank or other financial institution is
acting through a branch or agency located in the United States, in the country
under the laws of which it is organized or in another country that is also a
member of the OECD, (iii) the central bank of any country that is a member of
the OECD, (iv) a finance company, insurance company or other financial
institution or fund that is engaged in making, purchasing or otherwise
investing in loans in the ordinary course of its business and having total
assets in excess of $500,000,000, (v) any Affiliate of an existing Lender or
(vi) any other Person approved by the Administrative Agent and Maxim, which
approval shall not be unreasonably withheld.
"Eligible Inventory" means, with respect to Maxim and its
Subsidiaries, without duplication, such Inventory (other than work-in-process,
packaging materials and supplies) which the Required Lenders, in their
discretion, deem to be Eligible Inventory. Without limiting the generality of
the foregoing, no Inventory is to be Eligible Inventory unless it (i) is raw
materials or finished goods in the Borrowers' possession and control, (ii) is
readily marketable and saleable in its current form, in the normal course of
Borrowers' business at prices at least equal to the cost thereof, (iii) is in
good, new condition and is not obsolete, unmerchantable, slow moving or stale
(any finished goods Inventory that has remained in Borrowers' stock for more
than twelve (12) months is to be deemed slow moving under this clause), (iv) is
not goods returned to any Borrower by or repossessed from an Account Debtor or
goods taken in trade, unless such returned Inventory is undamaged and
immediately saleable and was returned for reasons other than damage or
saleability; (v) meets all standards of safety and quality imposed by any
governmental agency or authority, whether by general law or regulation or by
specific contract, (vi) conforms in all respects to the warranties and
representations set forth in this Agreement, (vii) is at all times subject to a
duly perfected, first priority security interest in favor of the Administrative
Agent, for the benefit of the Lenders, and no other Lien, (viii) is situated at
a location listed and described on Schedule 5.1(r) and is not in-transit to
customers, (ix) is not subject to a negotiable warehouse receipt or other
negotiable instrument unless such negotiable receipt or instrument is pledged
to the Administrative Agent, for the benefit of the Lenders, (x) is owned by a
Borrower and not held by such Borrower on consignment or other
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<PAGE> 14
sale or return terms, and (xi) is subject to no license or other agreement that
limits or restricts any Borrower's, the Administrative Agent's or any Lender's
right to sell or otherwise dispose of such Inventory.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees or
former employees of any Borrower or any ERISA Affiliate or (b) has at any time
within the preceding six years been maintained for the employees or former
employees of any Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any and all federal, state, provincial and
local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals and interpretations, and orders of courts or Governmental
Authorities, relating to the protection of human health or the environment,
including, but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation,
handling, reporting, licensing, permitting, investigation or remediation of
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA Affiliate" means any Person who together with any Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Event of Default" means any of the events specified in Section 10.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Excess Cash Flow" means, with respect to Maxim and its Subsidiaries,
for any Fiscal Year and without duplication, (a) EBITDAR, less (b) the sum of
(i) Capital Expenditures, (ii) Interest Expense paid in cash, (iii) scheduled
principal payments paid with respect to any Debt, (iv) income and franchise
taxes paid in cash, and (iv) rental expense paid in cash.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the third anniversary of the Closing Date.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum (rounded upward, if necessary, to the next 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published at 11:00 a.m. (Charlotte time) for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"First Union" shall have the meaning assigned thereto in the preamble
hereof.
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"Fiscal Year" means each fiscal year of Maxim and its Subsidiaries
ending on January 31.
"Fixed Charges" means, with respect to Maxim and its Subsidiaries, for
any period and without duplication, and calculated in accordance with GAAP, (a)
current maturities of Funded Debt (without inclusion of the rental expense
multiple, so as to avoid duplication with subsection (c) below), plus (b)
Interest Expense required to be paid during such period, plus (c) rental
expense required to be paid during such period, plus (d) taxes required to be
paid during such period, plus (e) cash distributions made during such period as
permitted pursuant to Section 9.7.
"Funded Debt" means, with respect to Maxim and its Subsidiaries, as of
any date of determination and without duplication, all Debt, including the
principal portion of all Capital Lease obligations and all subordinated Debt,
plus the product of (i) eight (8) multiplied by (ii) rental expense paid or
accrued during the period under measurement ending on the date of
determination.
"Funding Borrower" shall have the meaning assigned thereto in Section
2.11(d).
"GAAP" means generally accepted accounting principles, as recognized
by the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, applied and maintained on a consistent basis for
Maxim and its Subsidiaries throughout the period indicated and consistent with
the prior financial practice of Maxim and its Subsidiaries.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"Governmental Authority" means any nation, province, state or
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Environmental Law or common law,
(d) the discharge or emission or release of which requires a permit or license
under any Environmental Law or other Governmental Approval, (e) which are
deemed to constitute a nuisance, a trespass or pose a health or safety hazard
to persons or neighboring properties, (f) which are materials consisting of
underground or aboveground storage tanks, whether empty, filled or partially
filled with any substance, or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate or
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<PAGE> 16
currency risk exposure executed in connection with hedging the interest rate or
currency exposure of the Borrowers, and any confirming letter executed pursuant
to such hedging agreement, all as amended or supplemented from time to time.
"Image" shall have the meaning assigned thereto in the preamble
hereof.
"Image Acquisition" means the acquisition by Maxim or one of its
Subsidiaries of the outstanding stock of Image pursuant to that certain
Acquisition and Merger Agreement dated May 31, 1996.
"Initial Interest Rate Period" means the period during which all Loans
shall be Base Rate Loans or LIBOR Rate Loans with Interest Periods of one
month, which period shall commence on the date three (3) Business Days after
the Closing Date and end on the earlier of (i) the date on which the
Administrative Agent notifies the Borrowers that the syndication process with
respect to the Loans and the Commitments hereunder has been completed, or (ii)
the date sixty (60) days after the Closing Date.
"Intercompany Subordination Agreement" means the Intercompany
Subordination Agreement of even date by and among Maxim, certain Subsidiaries
of Maxim identified therein and the Administrative Agent, for the benefit of
itself and the Lenders, substantially in the form of Exhibit H attached hereto,
as amended or supplemented from time to time.
"Interest Expense" means, for Maxim and its Subsidiaries, for any
period and without duplication, gross interest expense (including without
limitation, interest expense attributable to Capital Leases and all net
obligations pursuant to Hedging Agreements), determined for such period in
accordance with GAAP.
"Interest Payment Date" means, with respect to Base Rate Loans, the
last Business Day of each calendar quarter commencing with the first calendar
quarter ending after the Closing Date, and with respect to LIBOR Rate Loans,
the last day of each Interest Period applicable thereto (unless such Interest
Period extends over three (3) months, in which case "Interest Payment Date"
shall also include the last Business Day of the third month during such
Interest Period).
"Interest Period" shall have the meaning assigned thereto in Section
3.1(b).
"Inventory" means all of the inventory of the Borrowers, whether now
owned or hereafter acquired by any Borrower and wherever located, including,
but not limited to, all goods intended for sale or lease by the Borrowers, or
to be furnished under contracts of service, all work in process, and all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such goods or
otherwise used or consumed in the Borrowers' business.
"Issuing Bank" means First Union, as the issuer of a Letter of Credit.
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<PAGE> 17
"Joinder Agreement" means a Joinder Agreement substantially in the
form of Exhibit I executed by each Subsidiary in accordance with Section 7.12,
as amended or supplemented from time to time.
"Lender" shall have the meaning assigned thereto in the preamble
hereof, and includes each Person executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 12.9.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's applicable Commitment Percentage of the Loans.
"Letter of Credit" means a letter of credit at any time issued by the
Issuing Bank for the account of the Borrowers.
"LIBOR" means the rate of interest determined on the basis of the rate
for deposits in Dollars for a period equal to the applicable Interest Period
commencing on the first day of such Interest Period appearing on Telerate Page
3750 as of 11:00 a.m. (London time) two Business Days prior to the first day of
the applicable Interest Period. In the event that such rate does not appear on
Telerate Page 3750, "LIBOR" shall be determined by the Administrative Agent to
be the rate per annum at which deposits in Dollars are offered by leading
reference banks in the London interbank market to First Union at approximately
11:00 a.m. (London time) two Business Days prior to the first day of the
applicable Interest Period for a period equal to such Interest Period and in an
amount substantially equal to the amount of the applicable Loan.
"LIBOR Rate" means (a) LIBOR divided by (b) one (1) less the Reserve
Percentage (such rate to be rounded upward to the next whole multiple of 1/16
of 1%).
"LIBOR Rate Loan" means any Loan bearing interest at a rate determined
with reference to the LIBOR Rate as provided in Section 3.1(a) hereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loan" means any loan or advance made by any Lender pursuant to this
Agreement, including without limitation, any Revolver Loan, the Term A Loan and
the Term B Loan, and all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Intercompany Subordination Agreement, any Joinder Agreement, the Security
Documents and any supplements thereto executed in connection with any Joinder
Agreement, any Hedging Agreement executed by any Lender and each other
document, instrument and agreement executed and delivered by any Borrower, a
Subsidiary thereof or their counsel in connection with this Agreement or
otherwise
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<PAGE> 18
referred to herein or contemplated hereby, all as may be amended or
supplemented from time to time.
"LOC Committed Amount" means five million dollars ($5,000,000).
"LOC Issuance Fee" means the non-refundable, fully-earned fee equal to
1/8% per annum of the face amount of each Letter of Credit, payable jointly and
severally by Borrowers to Issuing Bank upon the issuance of such Letter of
Credit and on each renewal or extension of such Letter of Credit.
"LOC Obligations" means, as to each Letter of Credit, all liabilities
of the Borrowers or any of their Subsidiaries thereunder, whether contingent or
otherwise, including (a) the amount available to be drawn or which may become
available to be drawn, (b) all amounts that have been paid or made available by
the Administrative Agent or the Issuing Bank to the extent not reimbursed, and
(c) all unpaid interest, fees and expenses relating thereto.
"Material Adverse Effect" means, with respect to Maxim or any of its
Subsidiaries, a material adverse effect on the properties, business, prospects,
operations or condition (financial or otherwise) of any such Person or the
ability of any such Person to perform its obligations under the Loan Documents
to which it is a party.
"Material Contract" means (a) any contract or other agreement, written
or oral, of Maxim or any of its Subsidiaries involving monetary liability of or
to any such Person in an amount in excess of $1,000,000 per annum, or (b) any
other contract or agreement, written or oral, of Maxim or any of its
Subsidiaries the failure to comply with which could reasonably be expected to
have a Material Adverse Effect.
"Material Judgment Amount" means $1,000,000.
"Maxim" shall have the meaning assigned thereto in the preamble
hereof.
"Maximum Borrower Liability" shall have the meaning assigned thereto
in Section 2.11(a).
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate has
made, or accrued an obligation to make, contributions within the preceding six
years.
"Net Cash Proceeds" means, as applicable, (a) with respect to any sale
or other disposition of assets (including sale/leaseback transactions), the
gross cash proceeds received by Maxim or any of its Subsidiaries from such sale
or other disposition less (i) the sum of (A) all legal, title, recording,
transfer and income tax expenses, commissions and other fees and expenses
incurred, and all other federal, state, local and foreign taxes assessed in
connection therewith and (ii) the principal amount of, premium, if any, and
interest on any Debt secured by a Lien on the asset (or a portion thereof) sold
or disposed of, which Debt is required to be repaid in connection with such
sale, (b) with respect to any offering of debt or equity securities, the gross
cash proceeds received by Maxim or
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<PAGE> 19
any of its Subsidiaries therefrom less all legal, underwriting and other fees,
commissions and expenses incurred in connection therewith and (c) with respect
to any payment under an insurance policy, the amount of cash proceeds received
by Maxim or its applicable Subsidiary from the related insurance company,
unless (i) such payment does not exceed $10,000,000 in any single instance,
(ii) such payment is applied by Maxim or its applicable Subsidiary to replace
the property to which the payment relates and (iii) such replacement property
is ordered by Maxim or its applicable Subsidiary within ninety (90) days after
receipt of such payment by Maxim or its applicable Subsidiary.
"Net Income" means, with respect to Maxim and its Subsidiaries, for
any period and without duplication, net income (or loss) for such period
determined in accordance with GAAP; provided, that there shall be excluded from
the calculation of such Net Income the income of any Subsidiary (other than a
Wholly-Owned Subsidiary) if and to the extent that Maxim or a Wholly-Owned
Subsidiary has not received the income in a cash distribution.
"Net Worth" means, at any date of determination thereof, the sum of
the capital stock (excluding treasury stock and capital stock subscribed and
unissued) and surplus (including earned surplus, capital surplus and the
balance of the current profit and loss account not transferrable to surplus)
accounts of Maxim and its Subsidiaries appearing on a Consolidated balance
sheet of Maxim and its Subsidiaries prepared in accordance with GAAP.
"Notes" means the Revolver Note, the Swingline Note, the Term A Note
and the Term B Note, and "Note" means any of such Notes.
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 3.2.
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
all payment and other obligations owing by a Borrower to any Lender under any
Hedging Agreement and (c) all other fees and commissions (including attorney's
fees), charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by a Borrower to the Lenders or to the
Administrative Agent under or in respect of this Agreement, any Note or any of
the other Loan Documents, of every kind, nature and description, direct or
indirect, absolute or contingent, due or to become due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced by any note,
and whether or not for the payment of money.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 6.2.
"Other Debtor Relief Law" shall have the meaning assigned thereto in
Section 2.11(a).
"Other Taxes" shall have the meaning assigned thereto in Section
3.10(b).
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<PAGE> 20
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees or former
employees of any Borrower or any ERISA Affiliates or (b) has at any time within
the preceding six years been maintained for the employees or former employees
of any Borrower or any of their current or former ERISA Affiliates.
"Permitted Liens" means (a) Liens for taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA or Environmental Laws) not yet due or as to which the
period of grace (not to exceed thirty (30) days) , if any, related thereto has
not expired or which are being contested in good faith and by appropriate
proceedings if adequate reserves are maintained to the extent required by GAAP,
(b) the claims of materialmen, mechanics, carriers, warehousemen, processors or
landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business, (i) which are not overdue for a period of more than thirty
(30) days or (ii) which are being contested in good faith and by appropriate
proceedings, (c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation or
obligations under customer service contracts, (d) Liens constituting
encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of real property, which in the aggregate are
not substantial in amount and which do not, in any case, materially detract
from the value of such property or impair the use thereof in the ordinary
conduct of business, (e) Liens of the Administrative Agent for the benefit of
the Administrative Agent and the Lenders, and (f) Existing liens described on
Schedule 9.3.
"Person" means an individual, corporation, partnership, association,
trust, business trust, limited liability company, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group.
"Pledge Agreement" means the Pledge Agreement of even date executed by
Maxim in favor of the Administrative Agent for the benefit of itself and the
Lenders substantially in the form of Exhibit F, as amended or supplemented from
time to time.
"Possible Obligation Liability" means, with respect to any Borrower,
the maximum amount of the outstanding Obligations at the time of determination
which the Administrative Agent determines in its sole discretion that the
individual Borrower would be required to pay upon an Event of Default, taking
into consideration the financial resources of all of the other Borrowers that
are jointly and severally obligated upon the Obligations.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its prime
rate. Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties hereto
acknowledge that the rate announced publicly by the Administrative Agent as its
Prime Rate is an index or base rate and shall not necessarily be its lowest or
best rate charged to its customers or other banks.
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<PAGE> 21
"Projections" shall have the meaning assigned thereto in Section
6.1(c).
"Register" shall have the meaning assigned thereto in Section 12.9(b).
"Rebate Escrow Account" means the separate, segregated escrow account
of Maxim maintained with First Union, into which is deposited funds received by
Maxim reflecting rebate payments reserved for franchisees.
"Required Lenders" means, at any date, any combination of (a) Lenders
holding at least 66 2/3% of the combined sum of the Revolver Loan Commitments
and the aggregate outstanding principal amount of the Term Loans, or (b) if the
Revolver Facility has been terminated, Lenders holding at least 66 2/3% of the
aggregate outstanding principal amount of the Loans.
"Reserve Percentage" means the maximum daily arithmetic reserve
requirement imposed by the Board of Governors of the Federal Reserve System (or
any successor) under Regulation D on Eurocurrency liabilities (as defined in
Regulation D) for the applicable Interest Period as of the first day of such
Interest Period, but subject to any changes in such reserve requirement
becoming effective during the Interest Period. For purposes of calculating the
Reserve Percentage, the reserve requirement shall be as set forth in Regulation
D without benefit of credit for prorations, exemptions or offsets under
Regulation D, and further without regard to whether or not any Lender elects to
actually fund any Loan or portion thereof with Eurocurrency liabilities. Each
calculation by the Administrative Agent of the LIBOR Rate shall be conclusive
and binding for all purposes, absent manifest error.
"Revolver Facility" means the revolving credit facility extended to
the Borrowers pursuant to Section 2.1 in the aggregate principal amount not to
exceed at any time the lesser of (i) SIXTY-FIVE MILLION DOLLARS ($65,000,000)
or (ii) the then current amount of the Borrowing Base.
"Revolver Loan" means any Loan made to the Borrowers pursuant to
Section 2.1, and all such Loans collectively as the context requires.
"Revolver Notes" means the separate Revolving Credit Notes made by the
Borrowers payable to the order of each Lender, substantially in the form of
Exhibit A-1 hereto, evidencing the Revolver Facility, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "Revolver
Note" means any of such Notes.
"Revolver Facility Termination Date" means the earliest of the dates
referred to in Section 2.8.
"Revolver Loan Commitment" means, as to any Lender, the obligation of
such Lender to make Revolver Loans to the Borrowers hereunder in an aggregate
principal amount at any time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1, as the same may be reduced or
modified at any time or from time to time pursuant to Section 12.9.
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<PAGE> 22
"Revolver Loan Commitment Percentage" means, as to any Lender at any
time, the ratio of (a) the amount of the Revolver Loan Commitment of such
Lender to (b) the aggregate Revolver Loan Commitments of all of the Lenders.
"Scheduled Term A Installments" means the payments of the aggregate
principal balance of the Term A Loan which the Borrowers are obligated to pay
pursuant to Section 2.6, which are to be made in sixteen (16) quarterly
payments, fifteen (15) such quarterly payments, each in the amount of
$1,875,000, to be payable on the last day of each calendar quarter, commencing
December 31, 1997, and one (1) final such quarterly payment to be payable on
December 31, 2001, in the amount of $1,875,000 or, if different, the aggregate
principal amount of the Term A Loan then outstanding.
"Scheduled Term B Installments" means the payments of the aggregate
principal balance of the Term B Loan which the Borrowers are obligated to pay
pursuant to Section 2.6, which are to be made in twenty-four (24) quarterly
payments, the final payment to be due on September 30, 2003, in the amount of
$3,375,000, or, if different, the aggregate principal amount of the Term B Loan
then outstanding, and with earlier payments payable on the last day of each
calendar quarter, commencing December 31, 1997, each in the amount set forth
below opposite the date on which such payment is to be made:
<TABLE>
<CAPTION>
Payment Date Payment Amount
<S> <C>
December 31, 1997, March 31, 1998, $187,500
June 30, 1998 and September 30, 1998
December 31, 1998, March 31, 1999, $187,500
June 30, 1999 and September 30, 1999
December 31, 1999, March 31, 2000, $187,500
June 30, 2000 and September 30, 2000
December 31, 2000, March 31, 2001, $187,500
June 30, 2001 and September 30, 2001
December 31, 2001, March 31, 2002, $3,375,000
June 30, 2002 and September 30, 2002
December 31, 2002, March 31, 2003, $3,375,000
June 30, 2003 and September 30, 2003
</TABLE>
"SEC" means the Securities and Exchange Commission.
"Security Agreement" means the Security Agreement of even date
substantially in the form of Exhibit G executed by the Borrowers in favor of
the Administrative Agent for the benefit of itself and the Lenders, as amended,
modified or supplemented from time to time.
"Security Documents" means the collective reference to the Security
Agreement, the Pledge Agreement, the Trademark Assignment and each other
agreement or writing pursuant to which
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<PAGE> 23
Maxim or any Subsidiary thereof pledges or grants a security interest in the
Collateral or such Person guaranties the payment or performance of the
Obligations.
"Solvent" means, with respect to each of Maxim and each of its
Subsidiaries, that such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is
about to engage and is able to pay its debts as they mature, (b) owns property
having a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its probable liabilities (including
contingencies), and (c) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature.
"Swingline Committed Amount" means $5,000,000.
"Swingline Lender" means First Union, as the Lender with respect to
Swingline Loans.
"Swingline Loans" shall have the meaning assigned thereto in Section
2.3.
"Swingline Note" shall have the meaning assigned thereto in Section
2.3.
"Subsidiary" means as to any Person, any corporation, partnership or
other entity of which more than fifty percent (50%) of the outstanding capital
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity is at the time, directly or indirectly, owned by
such Person or the management is otherwise controlled by such Person
(irrespective of whether, at the time, capital stock or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening
of any contingency). Unless otherwise qualified, references to "Subsidiary" or
"Subsidiaries" herein shall refer to those of Maxim.
"Tangible Net Worth" means, with respect to Maxim and its
Subsidiaries, the excess of total assets over total liabilities, excluding,
however, from the definition of assets the amount of (a) any write up in the
book value of any asset resulting from a revaluation thereof subsequent to the
Closing Date, (b) treasury stock, (c) receivables from Affiliates, (d)
unamortized debt discount and expense and (e) patents, trademarks, trade names,
goodwill, deferred charges, organizational expenses and other intangible
assets, all determined in accordance with GAAP.
"Taxes" shall have the meaning assigned thereto in Section 3.10(a).
"Term A Loan" means the Loan in the aggregate principal of THIRTY
MILLION DOLLARS ($30,000,000), which is to be made by the Lenders to the
Borrowers pursuant to Section 2.6(a).
"Term A Loan Commitment" means, as to any Lender, the amount set forth
opposite such Lender's name under the caption "Term A Loan Commitment" on
Schedule 1.1, as the same may be reduced or modified at any time or from time
to time pursuant to Section 12.9.
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<PAGE> 24
"Term A Loan Commitment Percentage" means, as to any Lender at any
time, the ratio of (a) the amount of the Term A Loan Commitment of such Lender
to (b) the aggregate Term A Loan Commitments of all of the Lenders.
"Term A Notes" means the separate Term A Loan Notes made by the
Borrowers payable to the order of each Lender, substantially in the form of
Exhibit A-2 hereto, evidencing the Term A Loan, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "Term A Note"
means any of such Notes.
"Term B Loan" means the Loan in the aggregate principal of THIRTY
MILLION DOLLARS ($30,000,000), which is to be made by the Lenders to the
Borrowers pursuant to Section 2.6(b).
"Term B Loan Commitment" means, as to any Lender, the amount set forth
opposite such Lender's name under the caption "Term B Loan Commitment" on
Schedule 1.1, as the same may be reduced or modified at any time or from time
to time pursuant to Section 12.9.
"Term B Loan Commitment Percentage" means, as to any Lender at any
time, the ratio of (a) the amount of the Term B Loan Commitment of such Lender
to (b) the aggregate Term B Loan Commitments of all of the Lenders.
"Term B Notes" means the separate Term B Loan Notes made by the
Borrowers payable to the order of each Lender, substantially in the form of
Exhibit A-3 hereto, evidencing the Term B Loan, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "Term B Note"
means any of such Notes.
"Term Loans" means the Term A Loan and the Term B Loan.
"Term Sheet" shall have the meaning assigned thereto in Section
3.3(b).
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA (other than a Reportable Event as to which the provision
of 30 days' notice has been waived by the PBGC under applicable regulations);
(b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (c) the termination of a Pension Plan, the filing
of a notice of intent to terminate a Pension Plan or the treatment of a Pension
Plan amendment as a distress termination under Section 4041(c) of ERISA; (d)
the institution of proceedings to terminate, or the appointment of a trustee
with respect to, any Pension Plan by the PBGC; (e) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan; (f) the partial or complete withdrawal of any Borrower or any ERISA
Affiliate from a Multiemployer Plan; (g) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA; (h) any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA; or
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<PAGE> 25
(i) any event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Debt" means, at any date of determination thereof, the
Consolidated Debt of Maxim and its Subsidiaries.
"Trademark Assignment" means the Assignment for Security of even date
executed by Maxim in favor of the Administrative Agent, for the ratable benefit
of the Lenders, in substantially the form attached hereto as Exhibit J.
"UCC" means the Uniform Commercial Code as in effect in the State of
Georgia.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary all
of the shares of capital stock or other ownership interests of which are,
directly or indirectly, owned or controlled by Maxim and/or one or more of its
Wholly- Owned Subsidiaries.
SECTION 1.2 General. All terms of an accounting nature not
specifically defined herein shall have the meanings assigned thereto by GAAP.
Unless otherwise specified, a reference in this Agreement to a particular
section, subsection, Schedule or Exhibit is a reference to that section,
subsection, Schedule or Exhibit of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter. Any
reference herein to "Charlotte time" shall refer to the applicable time of day
in Charlotte, North Carolina.
SECTION 1.3 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including without limitation, all computations utilized by the
Borrowers or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent to the
contrary agreed to by the Borrowers, be performed in accordance with GAAP. In
the event that changes in GAAP (as in effect on the Closing Date) shall be
mandated by the Financial Accounting Standards Board or any similar accounting
body of comparable standing or shall be recommended by the Borrowers' certified
public accountants, to the extent that such changes would modify such
accounting terms or the interpretation or computation thereof, such changes
shall be followed in defining such accounting terms only from and after the
date the Borrowers, the Lenders and the Administrative Agent shall have entered
into an amendment of this Agreement to the extent necessary to reflect any such
changes in the financial covenants and other terms and conditions of this
Agreement.
SECTION 1.4 Other Definitions and Provisions.
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(a) Use of Capitalized Terms. Unless otherwise defined therein,
all capitalized terms defined in this Agreement shall have the defined meanings
when used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
CREDIT FACILITY
SECTION 2.1 Revolver Loans. Subject to the terms and conditions of
this Agreement, each Lender severally but not jointly agrees to make Revolver
Loans to the Borrowers jointly and severally from time to time from the Closing
Date through the Revolver Facility Termination Date as requested by Maxim, on
behalf of Borrowers, in accordance with the terms of Section 2.2; provided
that, (i) the aggregate principal amount of all outstanding Revolver Loans
(after giving effect to any amount requested) shall not exceed the lesser of
(A) the Borrowing Base or (B) sixty-five million dollars ($65,000,000), and
(ii) the principal amount of Revolver Loans from any single Lender shall not at
any time exceed such Lender's Revolver Loan Commitment. Each Revolver Loan by a
Lender shall be in a principal amount equal to such Lender's Revolver Loan
Commitment Percentage of the aggregate principal amount of Revolver Loans
requested on such occasion, up to a maximum principal amount at any time
outstanding under the Revolver Facility equal to such Lender's Revolver Loan
Commitment Percentage of the Borrowing Base at such time. If at any time the
Lenders shall make Revolver Loans to the Borrowers such that the aggregate
amount of Revolver Loans outstanding hereunder exceeds the Borrowing Base, such
Revolver Loans shall nonetheless constitute Obligations hereunder. The
Administrative Agent, at any time and from time to time, may, upon notice to
Maxim, apply the Borrowing Base requirement singly to each of the Borrowers and
condition the advance of any requested Revolver Loan on the requirement that
such Revolver Loan be used by, be solely for the direct benefit of, and be
advanced directly to, the single one or more Borrowers designated by the
Administrative Agent as having a sufficient current individual Borrowing Base
so that the principal amount of the requested Revolver Loan, when added to the
amount of the current Possible Obligation Liability for such Borrower, as
determined by the Administrative Agent in its sole discretion, would not exceed
the current individual Borrowing Base for the Borrower. Subject to the terms
and conditions hereof, the Borrowers may borrow, repay and reborrow Revolver
Loans hereunder until the Revolver Facility Termination Date.
SECTION 2.2 Procedure for Advances of Revolver Loans.
(a) Requests for Borrowing. Maxim, on behalf of the Borrowers,
shall give the Administrative Agent irrevocable prior written notice in the
form attached hereto as Exhibit B (a "Notice of Borrowing") not later than
11:00 a.m. (Charlotte time) (i) at least one (1) Business Day before each Base
Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate
Loan,
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of its intention to borrow, specifying (A) the date of such borrowing, which
shall be a Business Day, (B) the amount of such borrowing, which shall, with
respect to LIBOR Rate Loans, be in an aggregate principal amount of $3,000,000
or a whole multiple of $1,000,000 in excess thereof and, with respect to Base
Rate Loans, be in an aggregate principal amount of $1,000,000 or a whole
multiple of $500,000 in excess thereof, (C) whether the Loans are to be LIBOR
Rate Loans or Base Rate Loans and (D) if the borrowing is to occur after the
Initial Interest Rate Period, in the case of a LIBOR Rate Loan, the duration of
the Interest Period applicable thereto. Notices received after 11:00 a.m.
(Charlotte time) shall be deemed received on the next Business Day. The
Administrative Agent shall promptly notify the Lenders of each Notice of
Borrowing.
(b) Disbursement of Revolver Loans. Not later than 1:00 p.m.
(Charlotte time) on the proposed borrowing date for any Revolver Loan, each
Lender will make available to the Administrative Agent, for the account of the
Borrowers, at the office of the Administrative Agent in Dollars in funds
immediately available to the Administrative Agent, such Lender's Revolver Loan
Commitment Percentage of the Revolver Loans requested. The proceeds of each
borrowing requested pursuant to this Section 2.2(b) shall be disbursed in
immediately available funds by crediting such proceeds to the account of
Borrowers designated in the Accounts Designation Letter. Subject to Section 3.6
hereof, the Administrative Agent shall not be obligated to disburse the
proceeds of any Revolver Loan requested pursuant to this Section 2.2 until each
Lender shall have made available to the Administrative Agent its applicable
Revolver Loan Commitment Percentage of such Revolver Loan.
SECTION 2.3 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to the terms and conditions of this
Agreement, First Union, in its individual capacity, agrees to make certain
revolving credit loans requested by the Borrowers in Dollars to the Borrowers
(each a "Swingline Loan" and, collectively, the "Swingline Loans") from time to
time from the Closing Date until the Revolver Facility Termination Date for the
purposes hereinafter set forth; provided, however, that at any time (i) the
aggregate principal amount of Swingline Loans outstanding shall not exceed the
Swingline Committed Amount, and (ii) the aggregate principal amount of
outstanding Revolver Loans plus the aggregate principal amount of outstanding
Swingline Loans shall not exceed the lesser of (A) the aggregate Revolver Loan
Commitments or (B) the Borrowing Base. Swingline Loans hereunder shall be made
as Base Rate Loans and may be repaid and reborrowed in accordance with the
provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the Borrowers desire a
Swingline Loan advance hereunder Maxim, on behalf of the Borrowers, shall give
written notice (or telephone notice promptly confirmed in writing) to the
Swingline Lender not later than 12:00 Noon (Charlotte time) on the Business Day
of the requested Swingline Loan advance. Each such notice shall be irrevocable
and shall specify (A) that a Swingline Loan advance is requested, (B) the date
of the requested Swingline Loan advance (which shall be a Business Day) and (C)
the principal amount of the Swingline Loan advance requested. Each Swingline
Loan shall be made as a Base Rate Loan and shall mature as provided in
subsection (b)(iii) below.
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(ii) Minimum Amounts. Each Swingline Loan advance shall be in
a minimum principal amount of $500,000 and in integral multiples of $100,000 in
excess thereof (or the remaining amount of the Swingline Committed Amount, if
less).
(iii) Repayment of Swingline Loans. The principal amount of
all Swingline Loans shall be due and payable on the earlier of (A) the maturity
date specified by the Swingline Lender or (B) the Revolver Facility Termination
Date. The Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrowers and the Lenders, demand repayment of its Swingline
Loans by way of an advance under the Revolver Facility, in which case the
Borrowers shall be deemed to have requested a Revolver Loan comprised solely of
Base Rate Loans in the amount of such Swingline Loans; provided, however, that
any such demand shall be deemed to have been given one Business Day prior to
the Revolver Facility Termination Date and on the date of the occurrence of any
Event of Default described in Section 10.1 and upon acceleration of the
Obligations hereunder and the exercise of remedies in accordance with the
provisions of Section 10.2. Each Lender hereby irrevocably agrees to make its
pro rata share of each such Revolver Loan in the amount, in the manner and on
the date specified in the preceding sentence notwithstanding (I) the amount of
such borrowing may not comply with the minimum amount for advances of Revolver
Loans otherwise required hereunder, (II) whether any conditions specified in
Section 4.3 are then satisfied, (III) whether a Default or an Event of Default
then exists, (IV) failure of any such request or deemed request for Revolver
Loan to be made by the time otherwise required hereunder, (V) whether the date
of such borrowing is a date on which Revolver Loans are otherwise permitted to
be made hereunder or (VI) any termination of the Revolver Facility relating
thereto immediately prior to or contemporaneously with such borrowing. In the
event that any Revolver Loan cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to any
Borrower or any Subsidiary of any Borrower), then each Lender hereby agrees
that it shall forthwith purchase (as of the date such borrowing would otherwise
have occurred, but adjusted for any payments received from such Borrower on or
after such date and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be necessary to
cause each such Lender to share in such Swingline Loans ratably based upon its
Revolver Loan Commitment Percentage of the aggregate Revolver Loan Commitments
(determined before giving effect to any termination of the Revolver Facility
pursuant to Section 2.8), provided that (A) all interest payable on the
Swingline Loans shall be for the account of the Swingline Lender until the date
as of which the respective participation is purchased and (B) at the time any
purchase of participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Swingline Lender, to the
extent not paid to the Swingline Lender by the Borrowers in accordance with the
terms of subsection (c)(ii) hereof, interest on the principal amount of
participation purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to but excluding the date of payment
for such participation, at the rate equal to the Federal Funds Rate.
(c) Interest on Swingline Loans.
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(i) Subject to the provisions of Section 3.1, each Swingline
Loan shall bear interest at a per annum rate (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be) equal to the Base Rate plus the Applicable Margin.
(ii) Payment of Interest. Interest on Swingline Loans shall be
payable in arrears on each applicable Interest Payment Date (or at such other
times as may be specified herein).
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note (the "Swingline Note") of the Borrowers to the
Swingline Lender in substantially the form of Exhibit A-4.
SECTION 2.4 Repayment of Revolver Loans.
(a) Repayment on Revolver Facility Termination Date. The Borrowers
shall repay the outstanding principal amount of all Revolver Loans made to such
Borrowers in full, together with all accrued but unpaid interest thereon, on
the Revolver Facility Termination Date.
(b) Mandatory Repayment of Excess Loans. If at any time the
outstanding principal amount of all Revolver Loans exceeds the aggregate
Revolver Loan Commitments of the Lenders, the Borrowers shall repay such
excess. Each such repayment shall be accompanied by accrued interest on the
amount repaid and any amount required to be paid pursuant to Section 3.8
hereof.
(c) Optional Repayments. The Borrowers may at any time and from
time to time repay the Revolver Loans made thereto, in whole or in part, upon
at least three (3) Business Days' irrevocable notice to the Administrative
Agent with respect to LIBOR Rate Loans and one (1) Business Day irrevocable
notice with respect to Base Rate Loans, specifying the date and amount of
repayment and whether the repayment is of LIBOR Rate Loans or Base Rate Loans
or a combination thereof, and, if of a combination thereof, the amount
allocable to each. Upon receipt of such notice, the Administrative Agent shall
promptly notify each Lender. If any such notice is given, the amount specified
in such notice shall be due and payable on the date set forth in such notice.
Partial repayments shall be in an aggregate amount of $3,000,000 or a whole
multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Loans and
$1,000,000 or a whole multiple of $500,000 in excess thereof with respect to
Base Rate Loans. Each such repayment shall be accompanied by accrued interest
on the amount repaid and any amount required to be paid pursuant to Section
3.8.
(d) Limitation on Repayment of LIBOR Rate Loans. No Borrower may
repay any LIBOR Rate Loan hereunder on any day other than on the last day of
the Interest Period applicable thereto unless such repayment is accompanied by
any amount required to be paid pursuant to Section 3.8.
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SECTION 2.5 Letters of Credit.
(a) Issuance of Letters of Credit. Issuing Bank may from time to
time issue, extend or renew Letters of Credit for the account of the Borrowers,
upon such terms and conditions as Issuing Bank may then require; provided that
(i) the aggregate LOC Obligations shall at no time exceed the LOC Committed
Amount, and (ii) the sum of (A) the aggregate principal amount of Revolver
Loans outstanding, plus (B) the aggregate principal amount of Swingline Loans
outstanding, plus (C) the aggregate LOC Obligations, shall at no time exceed
the Borrowing Base. No Letter of Credit shall have (x) an original expiry date
more than one year from the date of issuance or (y) as originally issued or as
extended, an expiry date extending beyond the Revolver Facility Termination
Date. The joint and several reimbursement obligations of Borrowers under any
such Letters of Credit are to be Obligations hereunder, and the coming due of
any reimbursement obligation under any such Letter of Credit is shall be deemed
to be a request for a Revolver Loan in the amount of such Obligation. Borrowers
jointly and severally are to pay to Issuing Bank the LOC Issuance Fee upon the
issuance of any Letter of Credit. If an Event of Default occurs or exists,
Borrowers, on demand, are to deliver to the Administrative Agent good funds
equal to 100% of the maximum liability under all outstanding Letters of Credit,
which funds are to be deposited in a separate, blocked account (the "Cash
Collateral Account") maintained by Borrowers and are to be held in the Cash
Collateral Account for the benefit of the Lenders as cash collateral for the
Borrowers' joint and several reimbursement obligations and the other
Obligations.
(b) Participation. Each Lender, upon the issuance of a Letter of
Credit, shall share in the fee that is payable to the Lenders with respect to
the undrawn amount of the Letter of Credit and that is billable to the
Borrowers each quarter in arrears with respect to the average daily undrawn
amount of such Letter of Credit multiplied by the LIBOR Applicable Margin. Each
Lender shall be deemed to have purchased without recourse a risk participation
from Issuing Bank in such Letter of Credit and the obligations arising under
such Letter of Credit, in each case in an amount equal to its Revolver Loan
Commitment Percentage of the obligations under such Letter of Credit, and shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to Issuing Bank therefor and discharge when
due, its Revolver Loan Commitment Percentage of the obligations of Issuing Bank
arising under such Letter of Credit. Without limiting the scope and nature of
each Lender's participation in any Letter of Credit, to the extent that Issuing
Bank has not been reimbursed as required hereunder or under any such Letter of
Credit, each such Lender shall pay to Issuing Bank its Revolver Loan Commitment
Percentage of such unreimbursed drawing in same day funds on the day of
notification by Issuing Bank of an unreimbursed drawing pursuant to the
provisions of subsection (c) hereof. The obligation of each Lender to reimburse
Issuing Bank as provided above shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of Default or any
other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the joint and several obligations of the Borrowers to
reimburse Issuing Bank under any Letter of Credit, together with interest on
such reimbursement amounts as provided in subsection (c) hereof.
(c) Reimbursement. Issuing Bank will promptly notify the Borrowers
of any drawing under any Letter of Credit. Unless Maxim, on behalf of the
Borrowers, shall immediately notify Issuing Bank that the Borrowers intend to
reimburse Issuing Bank for such drawing other than from
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proceeds of Revolver Loans, the Borrowers shall be deemed to have requested
that the Lenders make Revolver Loans in the amount of such drawing as provided
in subsection (d) hereof on the related Letter of Credit, the proceeds of which
will be used to satisfy the related reimbursement obligations to Issuing Bank.
The Borrowers jointly and severally agree to reimburse Issuing Bank on the date
of drawing under any Letter of Credit (either with the proceeds of Revolver
Loans or otherwise) in immediately available funds. If the Borrowers shall fail
to reimburse Issuing Bank as provided hereinabove, the unreimbursed amount of
such drawing shall bear interest at a rate per annum equal to the Base Rate
plus the sum of (i) the Applicable Margin in effect from time to time and (ii)
two percent (2%). The Borrowers' reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances irrespective of any rights
of setoff, counterclaim or defense to payment any Borrower may claim or have
against Issuing Bank, the Administrative Agent, the Lenders, the beneficiary of
such Letter of Credit or any other Person, including without limitation any
defense based on any failure of any Borrower or any Subsidiary of any Borrower
to receive consideration or the legality, validity or unenforceability of the
Letter of Credit. Issuing Bank will promptly notify the other Lenders of the
amount of any unreimbursed drawing and each Lender shall promptly pay to the
Administrative Agent for the account of Issuing Bank, in Dollars and in
immediately available funds, the amount of such Lender's Revolver Loan
Commitment Percentage of such unreimbursed drawing. Such payment shall be made
on the day such notice is received by such Lender from Issuing Bank if such
notice is received at or before 3:00 P.M. (Charlotte time); otherwise, such
payment shall be made at or before 1:00 P.M. (Charlotte time) on the Business
Day next succeeding the day such notice is received. If such Lender does not
pay such amount to Issuing Bank in full upon such request, such Lender shall,
on demand, pay to the Administrative Agent for the account of Issuing Bank
interest on the unpaid amount during the period from the date of such drawing
until such Lender pays such amount to Issuing Bank in full at a rate per annum
equal to, if paid within two (2) Business Days of the date that such Lender is
required to make payments of such amount pursuant to the preceding sentence,
the Federal Funds Rate and thereafter at a rate equal to the Base Rate. Each
Lender's obligation to make such payment to Issuing Bank, and the right of
Issuing Bank to receive the same, shall be absolute and unconditional, shall
not be affected by any circumstance whatsoever and without regard to the
termination of this Agreement or the Commitments hereunder, the existence of a
Default or Event of Default or the acceleration of the obligations of Borrowers
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment by a
Lender to Issuing Bank, such Lender shall, automatically and without any
further action on the part of Issuing Bank or such Lender, acquire a
participation in an amount equal to such payment (excluding the portion of such
payment constituting interest owing to Issuing Bank) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest thereon,
and shall have a claim against Borrowers with respect thereto.
(d) Repayment with Revolver Loans. On any day on which the
Borrowers shall have requested, or been deemed to have requested as provided in
(c) above, a Revolver Loan advance to reimburse a drawing under a Letter of
Credit, the Administrative Agent shall give notice to the Lenders that a
Revolver Loan has been requested or deemed requested by the Borrowers to be
made in connection with a drawing under a Letter of Credit, in which case
Lenders shall make Revolver Loans to the Borrowers jointly and severally in a
principal amount for each Lender equal to such Lender's Revolver Loan
Commitment Percentage of such Revolver Loan requested or deemed to
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be requested by the Borrowers. Each Lender shall make available to the
Administrative Agent, at the office of the Administrative Agent in Dollars in
funds immediately available to the Administrative Agent, such Lender's Revolver
Loan Commitment Percentage of the Revolver Loans requested, and the proceeds
thereof shall be paid directly to Issuing Bank for application to the
respective LOC Obligations. Each such Lender hereby irrevocably agrees to make
its Revolver Loan Commitment Percentage of each such Revolver Loan immediately
upon any such request or deemed request in the amount, in the manner and on the
date specified in the preceding sentence notwithstanding (i) the amount of such
borrowing may not comply with the minimum amount for advances of Revolver Loans
otherwise required hereunder, (ii) whether any conditions specified Section 4.3
are then satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) failure for any such request or deemed request for Revolver Loans to be
made by the time otherwise required hereunder, (v) whether the date of such
borrowing is a date on which Revolver Loans are otherwise permitted to be made
hereunder or (vi) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the event
that any Revolver Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the commencement
of a proceeding under the Bankruptcy Code with respect to any Borrower or any
other Person obligated upon the Obligations), then each such Lender hereby
agrees that it shall forthwith purchase (as of the date such borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrowers on or after such date and prior to such purchase) from Issuing Bank
such participation in the outstanding LOC Obligations as shall be necessary to
cause each such Lender to share in such LOC Obligations ratably (based upon the
respective Revolver Loan Commitment Percentages of the Lenders (determined
before giving effect to any termination of the Commitments pursuant to Section
2.8)), provided that at the time any such purchase of a participation is
actually made, the purchasing Lender shall be required to pay to Issuing Bank,
to the extent not paid to the Issuing Bank by the Borrowers in accordance with
the terms of subsection (c) hereof, interest on the principal amount of
participation purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to but excluding the date of payment
for such participation, if paid within two (2) Business Days of the date of the
Revolver Loan, at the Federal Funds Rate, and thereafter at the Base Rate.
(e) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(f) Uniform Customs and Practices. Issuing Bank may have the
Letters of Credit be subject to the Uniform Customs and Practices for
Documentary Credits, as published as of the date of issue by the International
Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated
therein and deemed in all respects to be a part thereof.
(g) Indemnification; Nature of Issuing Bank's Duties.
(i) In addition to its other obligations under this
Section, the Borrowers jointly and severally shall and do hereby
protect, indemnify, pay and save Issuing Bank harmless from and
against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees)
that Issuing Bank may incur or be subject
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to as a consequence, direct or indirect, of (A) the issuance of any
Letter of Credit or (B) the failure of Issuing Bank to honor a drawing
under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions,
herein called "Government Acts").
(ii) As between the Borrowers and Issuing Bank, the
Borrowers shall assume all risks of the acts, omission or misuse of
any Letter of Credit by the beneficiary thereof, and Issuing Bank
shall not be responsible (A) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of any
Letter of Credit, even if any such document should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged, (B) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason, (C) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher, (D)
for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under a Letter of Credit or of the
proceeds thereof, and (E) for any consequences arising from causes
beyond the control of Issuing Bank, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent
the vesting of Issuing Bank's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions of the foregoing, any action taken or omitted
by Issuing Bank, under or in connection with any Letter of Credit or
the related certificates, if taken or omitted in good faith, shall not
put such Issuing Bank under any resulting liability to the Borrowers
or any of their Subsidiaries. It is the intention of the parties that
this Agreement shall be construed and applied to protect and indemnify
Issuing Bank against any and all risks involved in the issuance of the
Letters of Credit, all of which risks are hereby assumed by the
Borrowers (on behalf of themselves and each of their Subsidiaries),
including, without limitation, any and all Government Acts. Issuing
Bank shall not, in any way, be liable for any failure by Issuing Bank
or anyone else to pay any drawing under any Letter of Credit as a
result of any Government Acts or any other cause beyond the control of
Issuing Bank.
(iv) Nothing in this subsection (g) is intended to limit
the joint and several reimbursement obligations of the Borrowers
contained in subsection (d) above. The joint and several obligations
of the Borrowers under this subsection (g) shall survive the
termination of this Agreement. No act or omissions of any current or
prior beneficiary of a Letter of Credit shall in any way affect or
impair the rights of Issuing Bank to enforce any right, power or
benefit under this Agreement.
(v) Notwithstanding anything to the contrary contained in
this subsection (g), the Borrowers shall not have an obligation to
indemnify Issuing Bank in respect of any liability incurred by Issuing
Bank (A) arising solely out of the negligence or willful misconduct of
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Issuing Bank, as determined by a court of competent jurisdiction, or
(B) caused by Issuing Bank's failure to pay under any Letter of Credit
after presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit, as determined by a
court of competent jurisdiction, unless such payment is prohibited by
at law, regulation, court order or decree.
(h) Responsibility of Issuing Bank. It is expressly understood and
agreed that the obligations of Issuing Bank to the Lenders are only those
expressly set forth in this Agreement and that Issuing Bank shall be entitled
to assume with respect to any Revolver Loans requested or deemed to be
requested hereunder that the conditions precedent to borrowings set forth in
Section 4.3 have been satisfied; provided, however, that nothing set forth in
this Section 2.5 shall be deemed to prejudice the right of any Lender to
recover from Issuing Bank any amounts made available by such Lender to Issuing
Bank pursuant to this Section 2.5 in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of Issuing Bank.
(i) Conflict with Letter of Credit Documents. In the event of any
conflict between the provisions of this Agreement and any document or
instrument executed in connection with the issuance of any Letter of Credit
(including any letter of credit application), the terms and provisions of this
Agreement shall control.
SECTION 2.6 Term Loans.
(a) Term A Loans. Subject to the terms and conditions of this
Agreement, each Lender severally but not jointly agrees to make such Lender's
Term A Loan Commitment Percentage of the Term A Loan on the Closing Date.
Borrowers jointly and severally agree to make principal payments on the Term A
Loan in the aggregate principal amounts of the applicable Scheduled Term A
Installments.
(b) Term B Loans. Subject to the terms and conditions of this
Agreement, each Lender severally but not jointly agrees to make its Term B Loan
Commitment Percentage of the Term B Loan on the Closing Date. Borrowers jointly
and severally agree to make principal payments on the Term B Loan in the
aggregate principal amounts of the applicable Scheduled Term B Installments.
(c) Procedures for Advances of Term Loans. Maxim, on behalf of the
Borrowers, shall request the Term Loans to be made on the Closing Date by
written notice on the Closing Date to the Administrative Agent of the amount of
each such borrowing. The Administrative Agent shall give notice to each Lender
promptly upon receipt of such notice and of each such Lender's share of the
borrowing to be made pursuant thereto. Each Lender shall make its Term A Loan
Commitment Percentage of the Term A Loan, and its Term B Loan Commitment
Percentage of the Term B Loan, available to the Administrative Agent for the
account of Maxim (or such other Borrower as may be specified in the notice
delivered by Maxim pursuant to this subsection (c)) by 11:00 a.m. on the
Closing Date in funds immediately available to the Administrative Agent. The
Administrative Agent shall not be obligated to disburse the proceeds of the
Term A Loan or Term B Loan until each Lender shall have made available to the
Administrative Agent its applicable Term A Loan
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Commitment Percentage of the Term A Loan and its applicable Term B Loan
Commitment Percentage of the Term B Loan.
(d) Mandatory Prepayments. Borrowers shall prepay the Term Loans
in the amounts and on the dates as follows:
(i) Within ninety (90) days after the end of each
Fiscal Year, commencing with the fiscal year ending January 31, 1997, Borrowers
shall prepay the Term Loans in an amount equal to seventy-five percent (75%) of
Excess Cash Flow of Maxim and its Subsidiaries for such prior Fiscal Year.
(ii) Within five (5) Business Days after any
disposition by Maxim or its Subsidiaries, whether by sale, lease (including,
without limitation, the sale and lease-back of any asset), transfer, loss,
damage, destruction, condemnation or otherwise, of any or all of the assets of
Maxim or any of its Subsidiaries other than sales of inventory in the ordinary
course of business, Borrowers shall prepay the Term Loans in an amount equal to
the Net Cash Proceeds received by Maxim or any of its Subsidiaries from any
such disposition, unless the amount of Net Cash Proceeds received from such
disposition and related dispositions is less than $500,000.
(iii) Within five (5) Business Days after the sale
by Maxim or any of its Subsidiaries of any equity or debt securities, Borrowers
shall prepay the Term Loans in an amount equal to the Net Cash Proceeds
received by Maxim or any of its Subsidiaries from such sale; provided that, if
the ratio of Funded Debt as of the end of the prior Fiscal Year to EBITDAR for
the prior Fiscal Year is less than 3.0 to 1, the amount otherwise subject to
mandatory prepayment by Borrowers pursuant to this paragraph (iii) shall not be
included in the amounts required to be prepaid by Borrowers pursuant to this
subsection (d).
(e) All prepayments made pursuant to subsection (d) above shall be
applied pro rata between the Term A Loan and the Term B Loan and shall be
applied to reduce the Scheduled Term A Installments and the Scheduled Term B
Installments on a pro rata basis between the Term A Loan and the Term B Loan,
provided that such prepayments shall be applied to the Scheduled Term A
Installments and the Scheduled Term B Installments in the inverse order of
maturity. Concurrently with the making of any such payment, Borrowers shall
deliver to the Administrative Agent and Lenders a certificate of Maxim's chief
financial officer demonstrating its calculation of the amount required to be
paid. The calculation of the amount required to be paid is to be subject to the
approval of the Administrative Agent, in its sole and absolute discretion. Such
amounts prepaid may not be reborrowed.
SECTION 2.7 Notes.
(a) Revolver Notes. Each Lender's Revolver Loans and the joint and
several obligation of the Borrowers to repay the Revolver Loans made thereto
shall be evidenced by the Revolver Note executed by the Borrowers payable to
the order of such Lender representing the Borrowers' joint and several
obligation to pay such Lender's Revolver Loan Commitment or, if less, the
aggregate unpaid principal amount of all Revolver Loans made and to be made by
such Lender to the
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Borrowers hereunder, plus interest and all other fees, charges and other
amounts due thereon. Each Revolver Note shall be dated the date hereof and
shall bear interest on the unpaid principal amount thereof at the applicable
interest rate per annum specified in Section 3.1.
(b) Term A Notes. Each Lender's Term A Loans and the joint and
several obligation of the Borrowers to repay the Term A Loans made thereto
shall be evidenced by the Term A Note executed by the Borrowers payable to the
order of such Lender representing the Borrowers' joint and several obligation
to pay such Lender's Term A Loan Commitment or, if less, the aggregate unpaid
principal amount of the Term A Loan made and to be made by such Lender to the
Borrowers hereunder, plus interest and all other fees, charges and other
amounts due thereon. Each Term A Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 3.1.
(c) Term B Notes. Each Lender's Term B Loans and the joint and
several obligation of the Borrowers to repay the Term B Loans made thereto
shall be evidenced by the Term B Note executed by the Borrowers payable to the
order of such Lender representing the Borrowers' joint and several obligation
to pay such Lender's Term B Loan Commitment or, if less, the aggregate unpaid
principal amount of the Term B Loan made and to be made by such Lender to the
Borrowers hereunder, plus interest and all other fees, charges and other
amounts due thereon. Each Term B Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 3.1.
SECTION 2.8 Termination of Revolver Facility. The Lenders' Revolver
Loan Commitments under Sections 2.1 and 2.2 shall terminate on the earlier of
(a) the Expiration Date or (b) the date of termination by the Administrative
Agent on behalf of the Lenders pursuant to Section 10.2(a); provided, however,
the Administrative Agent and Lenders in their sole discretion may, by written
notice to the Borrowers, extend the Revolver Facility and the Revolver Loan
Commitments for a period of one (1) year following the Expiration Date, subject
in all respects to prior termination of the Revolver Facility by the
Administrative Agent on behalf of the Lenders pursuant to Section 10.2(a).
SECTION 2.9 Use of Proceeds. The Borrowers shall use the proceeds of
the Loans (a) to refinance the existing Debt of the Borrowers, (b) to finance
the acquisition of Image Industries, Inc. and (c) for working capital and
general corporate requirements of the Borrowers, including the payment of
certain fees and expenses incurred in connection with the transactions
contemplated hereby.
SECTION 2.10 Security. The obligations of each Borrower shall be
secured in accordance with the terms of the applicable Security Documents.
SECTION 2.11 Maximum Borrower Liability.
(a) It is the intent of the Borrowers, the Administrative Agent,
the Lenders and any other Person holding any of the Obligations that each
Borrower's maximum obligations hereunder (such
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Borrower's "Maximum Borrower Liability") in any case or proceeding referred to
below (but only in such a case or proceeding) shall not be in excess of:
(i) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code on or within one year from the date on which
any of the Obligations of such Borrower are incurred, the maximum amount that
would not otherwise cause the obligations of such Borrower hereunder (or any
other obligations of such Borrower to the Administrative Agent, the Lenders and
any other Person holding any of the Obligations) to be avoidable or
unenforceable against such Borrower under (A) Section 548 of the Bankruptcy
Code or (B) any state fraudulent transfer or fraudulent conveyance act or
statute applied in such case or proceeding by virtue of Section 544 of the
Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code subsequent to one year from the date on
which any of the Obligations of such Borrower are incurred, the maximum amount
that would not otherwise cause the obligations of such Borrower hereunder (or
any other obligations of such Borrower to the Administrative Agent, the Lenders
and any other Person holding any of the Obligations) to be avoidable or
unenforceable against such Borrower under any state fraudulent transfer or
fraudulent conveyance act or statute applied in any such case or proceeding by
virtue of Section 544 of the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against such
Borrower under any law, statute or regulation other than the Bankruptcy Code
relating to dissolution, liquidation, conservatorship, bankruptcy, moratorium,
readjustment of debt, compromise, rearrangement, receivership, insolvency,
reorganization or similar debtor relief from time to time in effect affecting
the rights of creditors generally (collectively, "Other Debtor Relief Law"),
the maximum amount that would not otherwise cause the obligations of such
Borrower hereunder (or any other obligations of such Borrower to the
Administrative Agent, the Lenders and any other Person holding any of the
Obligations) to be avoidable or unenforceable against such Borrower under such
Other Debtor Relief Law, including, without limitation, any state fraudulent
transfer or fraudulent conveyance act or statute applied in any such case or
proceeding. (The substantive state or federal laws under which the possible
avoidance or unenforceability of the obligations of any Borrower hereunder (or
any other obligations of such Borrower to the Administrative Agent, the Lenders
and any other Person holding any of the Obligations) shall be determined in any
such case or proceeding shall hereinafter be referred to as the "Avoidance
Provisions").
(b) To the extent set forth in Section 2.11(a), but only to the
extent that the Obligations of any Borrower hereunder, or the transfers made by
such Borrower under the Pledge Agreement, the Security Agreement or the
Trademark Assignment, would otherwise be subject to avoidance under any
Avoidance Provisions if such Borrower is not deemed to have received valuable
consideration, fair value, fair consideration or reasonably equivalent value
for such transfers or obligations, or if such transfers or obligations of any
Borrower hereunder would render such Borrower insolvent, or leave such Borrower
with an unreasonably small capital or unreasonably small assets to conduct its
business, or cause such Borrower to have incurred debts (or to have intended to
have incurred debts) beyond its ability to pay such debts as they mature, in
each case as of the time any of the obligations of such Borrower are deemed to
have been incurred and transfers
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made under such Avoidance Provisions, then the obligations of such Borrower
hereunder shall be reduced to that amount which, after giving effect thereto,
would not cause the Obligations of such Borrower hereunder (or any other
obligations of such Borrower to the Administrative Agent, the Lenders or any
other Person holding any of the Obligations), as so reduced, to be subject to
avoidance under such Avoidance Provisions. This Section 2.11(b) is intended
solely to preserve the rights hereunder of the Administrative Agent, the
Lenders and any other Person holding any of the Obligations to the maximum
extent that would not cause the obligations of the Borrowers hereunder to be
subject to avoidance under any Avoidance Provisions, and no Borrower nor any
other Person shall have any right, defense, offset, or claim under this Section
2.11(b) as against the Administrative Agent, the Lenders or any other Person
holding any of the Obligations that would not otherwise be available to such
Person under the Avoidance Provisions.
(c) Each Borrower agrees that the Obligations may at any time and
from time to time exceed the Maximum Borrower Liability of such Borrower, and
may exceed the aggregate Maximum Borrower Liability of all Borrowers hereunder,
without impairing this Agreement or any provision contained herein or affecting
the rights and remedies of the Lenders and the Administrative Agent hereunder.
(d) In the event any Borrower (a "Funding Borrower") shall make
any payment or payments under this Agreement or shall suffer any loss as a
result of any realization upon any collateral granted by it to secure its
obligations hereunder, each other Borrower (each, a "Contributing Borrower")
shall contribute to such Funding Borrower an amount equal to such payment or
payments made, or losses suffered, by such Funding Borrower determined as of
the date on which such payment or loss was made multiplied by the ratio of (i)
the Maximum Borrower Liability of such Contributing Borrower (without giving
effect to any right to receive any contribution or other obligation to make any
contribution hereunder), to (ii) the aggregate Maximum Borrower Liability of
all Borrowers (including the Funding Borrowers) hereunder (without giving
effect to any right to receive, or obligation to make, any contribution
hereunder). Nothing in this Section 2.11(d) shall affect each Borrower's joint
and several liability to the Administrative Agent and the Lenders for the
entire amount of its Obligations. Each Borrower covenants and agrees that its
right to receive any contribution hereunder from a Contributing Borrower shall
be subordinate and junior in right of payment to all obligations of the
Borrowers to the Administrative Agent and Lenders hereunder.
SECTION 2.12 Waiver of Subrogation. Except for the contribution
provided for in Section 2.11(d) above, each Borrower hereby waives, to the
fullest extent possible, as against each other Borrower and its assets, any and
all rights, whether at law, in equity, by agreement or otherwise, to
subrogation, indemnity, reimbursement, contribution, or any other similar
claim, cause of action or remedy that otherwise would arise out of such
Borrower's payment or performance of the Obligations. The preceding waiver is
intended by each Borrower, the Lenders and the Administrative Agent to be for
the benefit of each other Borrower and any of their successors or assigns as an
absolute defense, other than under Section 2.11(d), to any action by any such
Borrower against any other Borrower or its assets.
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ARTICLE III
GENERAL LOAN PROVISIONS
SECTION 3.1 Interest.
(a) Interest Rate Options. Loans made on the Closing Date and on
the first two (2) Business Days thereafter shall be Base Rate Loans and shall
bear interest at the Base Rate plus the Applicable Margin. During the Initial
Interest Rate Period, at the election of the Borrowers, all Loans shall be
either Base Rate Loans or LIBOR Rate Loans with Interest Periods of one month.
Commencing on the first day of the Initial Interest Rate Period, subject to the
provisions of this Section 3.1, at the election of the Borrowers with respect
to whether a Loan will be a Base Rate Loan or a LIBOR Rate Loan, the Loans
shall bear interest at the Base Rate or the LIBOR Rate plus the Applicable
Margin (the "Applicable Margin") as set forth below in this Section 3.1. On
behalf of the Borrowers, Maxim shall select the rate of interest and Interest
Period, if any, applicable to any Loan at the time a Notice of Borrowing is
given pursuant to Section 2.2 or at the time a Notice of
Conversion/Continuation is given pursuant to Section 3.2. Each Loan or portion
thereof bearing interest based on the Base Rate shall be a "Base Rate Loan" and
each Loan or portion thereof bearing interest based on the LIBOR Rate shall be
a "LIBOR Rate Loan." Any Loan or any portion thereof as to which the applicable
Borrower or Borrowers have not duly specified an interest rate as provided
herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan,
Maxim, on behalf of the Borrowers, by giving notice at the times described in
Section 3.1(a), shall elect an interest period (each, an "Interest Period") to
be applicable to such Loan, which Interest Period shall be a period of one,
two, three, or six months; provided that:
(A) during the Initial Interest Rate Period, all LIBOR
Rate Loans shall have an Interest Period of one month;
(B) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the case of
immediately successive Interest Periods, each successive Interest
Period shall commence on the date on which the immediately preceding
Interest Period expires;
(C) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day; provided, that, with respect to any
LIBOR Rate Loan, if any Interest Period would otherwise expire on a
day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period
shall expire on the immediately preceding Business Day;
(D) with respect to any LIBOR Rate Loan, any Interest
Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically
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corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period;
(E) no Interest Period for Revolver Loans shall extend
beyond the Revolver Facility Termination Date and no Interest Period
for Term Loans shall be selected which, in connection with mandatory
principal repayments pursuant to Section 2.4, would cause the early
termination of such Interest Period; and
(F) there shall be no more than seven (7) Types of LIBOR
Rate Loans outstanding at any time; a "Type" of Loan shall refer to
LIBOR Rate Loans with Interest Periods beginning and ending on the
same date.
(c) Initial Applicable Margin. The Applicable Margin provided for
in Section 3.1(a) with respect to the Loans shall initially be as follows:
<TABLE>
<CAPTION>
Applicable Margin
-----------------
LIBOR Rate Loans Base Rate Loans
---------------- ---------------
<S> <C> <C>
Revolver Loans 2.50% 1.50%
Term A Loan 2.50% 1.50%
Term B Loan 3.25% 2.25%
</TABLE>
(d) Applicable Margin. The Applicable Margin for the Term B Loan
shall be as provided above in Section 3.1(c) throughout the term of this
Agreement. The Applicable Margin with respect to Revolver Loans and the Term A
Loan shall vary from time to time, beginning with the delivery by Borrowers
pursuant to Section 6.1(b) of the annual financial statements of Maxim and its
Subsidiaries for the Fiscal Year ending January 31, 1997. At the end of the
fiscal quarter following such delivery and at the end of each fiscal quarter
thereafter, the Applicable Margin with respect to Revolver Loans and the Term A
Loan shall be determined at the end of each fiscal quarter by reference to the
ratio of Consolidated Funded Debt of Maxim and Subsidiaries as of the end of
such fiscal quarter to Consolidated EBITDAR for Maxim and Subsidiaries for the
period of four consecutive fiscal quarters ending on the last day of such
fiscal quarter, as follows:
Funded Debt/EBITDAR LIBOR Margin Base Rate Margin
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<PAGE> 41
<TABLE>
<S> <C> <C>
Greater than 4.0 to 1.0 2.50% 1.25%
Greater than 3.25 to 1.0 but less 2.25% 1.00%
than or equal to 4.0 to 1.0
Greater than 2.50 to 1.0 but less 1.75% 0.50%
than or equal to 3.25 to 1.0
Greater than 2.0 to 1.0 but less 1.375% 0.125%
than or equal to 2.50 to 1.0
Greater than 1.50 to 1.0 but less 1.00% 0%
than or equal to 2.0 to 1.0
Less than or equal to 1.50 to 1.0 0.75% 0%
</TABLE>
(e) Adjustments to Applicable Margin. Adjustments, if any, in the
Applicable Margin shall be made by the Administrative Agent five (5) Business
Days after receipt by the Administrative Agent of quarterly financial
statements for Maxim and its Subsidiaries and the accompanying Officer's
Compliance Certificate setting forth the ratio of Consolidated Funded Debt to
Consolidated EBITDAR for Maxim and its Subsidiaries as of the most recent
fiscal quarter end (calculated as provided in subsection (d) above). Subject to
Section 3.1(f), in the event Maxim fails to deliver such financial statements
and certificate within the time required by Section 6.2 hereof, the Applicable
Margin shall be the highest Applicable Margin set forth above until five (5)
Business Days after the delivery of such financial statements and certificate.
(f) Default Rate. Upon the occurrence and during the continuance
of an Event of Default, (i) the Borrowers shall no longer have the option to
request LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear
interest at a rate per annum two percent (2%) in excess of the rate then
applicable to LIBOR Rate Loans until the end of the applicable Interest Period
and shall be converted on such date to Base Rate Loans and shall bear interest
thereafter at a rate equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans, and (iii) all outstanding Base Rate Loans shall
bear interest at a rate per annum equal to two percent (2%) in excess of the
rate then applicable to Base Rate Loans. Interest shall continue to accrue on
the Notes after the filing by or against any Borrower of any petition seeking
any relief in bankruptcy or under any act or law pertaining to insolvency or
debtor relief, whether state, federal or foreign.
(g) Interest Payment and Computation. Interest on each Base Rate
Loan shall be payable in arrears on each Interest Payment Date. Interest on
Base Rate Loans shall be computed on the basis of a year of 365 or 366 days, as
the case may be, and assessed for the actual number of days
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elapsed, and interest on LIBOR Rate Loans shall be computed on the basis of a
year of 360 days and assessed for the actual number of days elapsed.
(h) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by Applicable Law and the Lenders shall at the
Administrative Agent's option promptly refund to the applicable Borrower or
Borrowers any interest received by Lenders in excess of the maximum lawful rate
or shall apply such excess to the principal balance of the Obligations. It is
the intent hereof that the Borrowers not pay or contract to pay, and that
neither the Administrative Agent nor any Lender receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by the Borrowers under Applicable Law.
SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans.
After the Initial Interest Rate Period, provided that no Default or Event of
Default has occurred and is then continuing, the Borrowers shall have the
option to (a) convert at any time all or any portion of their outstanding Base
Rate Loans in a principal amount equal to $3,000,000 or any whole multiple of
$1,000,000 in excess thereof into one or more LIBOR Rate Loans, (b) upon the
expiration of any Interest Period, convert all or any part of their outstanding
LIBOR Rate Loans in a principal amount equal to $1,000,000 or a whole multiple
of $500,000 in excess thereof into Base Rate Loans, or (c) upon the expiration
of any Interest Period, continue any LIBOR Rate Loan in a principal amount of
$3,000,000 or any whole multiple of $1,000,000 in excess thereof as a LIBOR
Rate Loan. Whenever the Borrowers desire to convert or continue Loans as
provided above, Maxim, on behalf of the Borrowers, shall give the
Administrative Agent irrevocable prior written notice in the form attached
hereto as Exhibit C (a "Notice of Conversion/Continuation") not later than
11:00 a.m. (Charlotte time) three (3) Business Days, in the case of a
conversion to or a continuation of LIBOR Rate Loans, and one (1) Business Day,
in the case of a conversion to Base Rate Loans, before the day on which a
proposed conversion or continuation of such Loan is to be effective specifying
(i) the Loans to be converted or continued and, with respect to any LIBOR Rate
Loan to be converted or continued, the last day of the current Interest Period
therefor, (ii) the effective date of such conversion or continuation (which
shall be a Business Day), (iii) the principal amount of such Loans to be
converted or continued and (iv) with respect to a conversion to or a
continuation of LIBOR Rate Loans, the Interest Period to be applicable thereto.
The Administrative Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation.
SECTION 3.3 Fees.
(a) Commitment Fee. Commencing on the Closing Date and continuing
through and including the Revolver Facility Termination Date, the Borrowers
shall pay to the Administrative Agent, for the account of the Lenders, a non-
refundable commitment fee at a rate per annum (based on a 360 day year)
calculated with respect to the average daily unused portion of the Aggregate
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Revolver Loan Commitment. At the Closing Date the initial percentage rate for
the Commitment Fee shall equal .50%, but, for each fiscal quarter following the
delivery by Borrowers pursuant to Section 6.1(b) of the annual financial
statements of Maxim and its Subsidiaries for the Fiscal Year ending January 31,
1997, the percentage rate shall be determined for such fiscal quarter by
reference to the ratio of Consolidated Funded Debt of Maxim and Subsidiaries as
of the end of such fiscal quarter to Consolidated EBITDAR for Maxim and
Subsidiaries for the period of four consecutive fiscal quarters ending on the
last day of such fiscal quarter, as follows:
<TABLE>
<CAPTION>
Funded Debt/EBITDAR Commitment Fee Percentage
- ------------------- -------------------------
<S> <C>
Greater than or equal to .50%
3.25 to 1.0
Greater than 2.00 to 1.0 but .375%
less than 3.25 to 1
Less than or equal to 2.00 to 1 .25%
</TABLE>
The commitment fee shall be payable on the last Business Day of each calendar
quarter commencing September 30, 1996, and on the Revolver Facility Termination
Date. Such commitment fee shall be distributed by the Administrative Agent
between the Lenders pro rata in accordance with the Lenders' respective
Revolver Loan Commitment Percentages.
(b) Agent's Fees. In order to compensate the Administrative Agent
for its obligations hereunder, the Borrowers jointly and severally agree to pay
to the Administrative Agent and First Union Capital Markets Corp., for their
own account, the fees set forth in the Commitment and Term Sheet between First
Union and Maxim dated July 3, 1996 and the Fee Letter executed by Maxim in
connection therewith (collectively, the "Term Sheet").
SECTION 3.4 Manner of Payment.
(a) Allocation of Payments. Each payment (including repayments
described in Article II) by any Borrower on account of the principal of or
interest on the Loans or of any fee, commission or other amounts payable to the
Lenders under this Agreement or any Note shall be made in Dollars not later
than 1:00 p.m. (Charlotte time) on the date specified for payment under this
Agreement to the Administrative Agent for the account of the Lenders to be
distributed pro rata among the Revolver Loans, the Term A Loan and the Term B
Loan and among such Lenders in accordance with their respective Revolver Loan
Commitment Percentages, Term A Loan Commitment Percentages and Term B Loan
Commitment Percentages, as applicable, at the Administrative Agent's Office, in
immediately available funds, and shall be made without any set-off,
counterclaim or deduction whatsoever. Any payment received after such time but
before 2:00 p.m. (Charlotte time) on such day shall be deemed a payment on
such date for the purposes of Section 10.1, but for all other purposes shall be
deemed to have been made on the next succeeding Business Day. Any
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<PAGE> 44
payment received after 2:00 p.m. (Charlotte time) shall be deemed to have been
made on the next succeeding Business Day for all purposes.
(b) Pro Rata Treatment. Upon receipt by the Administrative Agent
of each such payment, the Administrative Agent shall credit each Lender's
account with its pro rata share of such payment in accordance with such
Lender's Revolver Loan Commitment Percentage, Term A Loan Commitment Percentage
or Term B Loan Commitment Percentage, as applicable, and shall wire advice of
the amount of such credit to each Lender. Each payment to the Administrative
Agent of its fees shall be made in like manner, but for the account of the
Administrative Agent.
(c) Non-Business Days. Subject to Section 3.1(b), if any payment
under this Agreement or any Note shall be specified to be made upon a day which
is not a Business Day, it shall be made on the next succeeding day which is a
Business Day and such extension of time shall in such case be included in
computing any interest if payable along with such payment.
SECTION 3.5 Crediting of Payments and Proceeds. In the event that any
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 10.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be distributed pro rata among the Revolver
Facility, the Term A Loan and the Term B Loan and shall be further applied
among the Administrative Agent and such Lenders first, to all Administrative
Agent's fees and expenses then due and payable, then to all other expenses then
due and payable by the Borrowers hereunder, then to all indemnity obligations
then due and payable by the Borrowers hereunder, then to all commitment and
other fees and commissions then due and payable, then to accrued and unpaid
interest on the Notes and any termination payments due in respect of a Hedging
Agreement with any Lender (pro rata in accordance with all such amounts due),
then to the principal amount of the Notes, in that order.
SECTION 3.6 Nature of Obligations of Lenders Regarding Loans;
Assumption by Administrative Agent. The obligations of the Lenders under this
Agreement to make the Loans are several and are not joint or joint and several.
Unless the Administrative Agent shall have received notice from a Lender prior
to a proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.2 and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrowers on such date a corresponding
amount. If such amount is made available to the Administrative Agent on a date
after such borrowing date, such Lender shall pay to the Administrative Agent on
demand an amount, until paid, equal to such Lender's applicable Revolver Loan
Commitment Percentage of such borrowing and interest thereon at a rate per
annum equal to the daily average Federal Funds Rate during such period as
determined by the Administrative Agent. A certificate of the Administrative
Agent with respect to any amounts owing under this Section shall be conclusive,
absent manifest error. If such Lender's applicable Revolver Loan Commitment
Percentage of such borrowing is not made available to the Administrative Agent
by such Lender within three (3) Business Days of such borrowing date, the
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<PAGE> 45
Administrative Agent shall be entitled to recover such amount made available by
the Administrative Agent with interest thereon at the rate per annum then
applicable to such Loan hereunder, on demand, from the applicable Borrower or
Borrowers. The failure of any Lender to make its applicable Revolver Loan
Commitment Percentage of any Loan available shall not relieve it or any other
Lender of its obligation, if any, hereunder to make its applicable Revolver
Loan Commitment Percentage of such Loan available on such borrowing date, but
no Lender shall be responsible for the failure of any other Lender to make its
applicable Revolver Loan Commitment Percentage of such Loan available on the
borrowing date.
SECTION 3.7 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with
respect to any Interest Period the Administrative Agent or any Lender (after
consultation with Administrative Agent) shall determine that by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in Eurodollars in the applicable amounts are not being offered
(through Telerate Page 3750 or otherwise) to the Administrative Agent or such
Lender for such Interest Period, then the Administrative Agent shall forthwith
give notice thereof to the Borrowers. Thereafter, until the Administrative
Agent notifies the Borrowers that such circumstances no longer exist, the
obligation of the Lenders to make LIBOR Rate Loans, and the right of the
Borrowers to convert any Loan to or continue any Loan as a LIBOR Rate Loan,
shall be suspended, and the applicable Borrower or Borrowers shall repay in
full (or cause to be repaid in full) the then-outstanding principal amount of
each such LIBOR Rate Loan, together with accrued interest thereon, on the last
day of the then current Interest Period applicable to such LIBOR Rate Loan or
convert the then outstanding principal amount of each such LIBOR Rate Loan to a
Base Rate Loan, if available, as of the last day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any of their respective
Lending offices) with any request or directive (whether or not having the force
of law) of any such Governmental Authority, central bank or comparable agency,
shall make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give
notice to the Borrowers and the other Lenders. Thereafter, until the
Administrative Agent notifies the Borrowers that such circumstances no longer
exist (which notification shall be given promptly, but in any event within
twenty (20) days after the Administrative Agent obtains actual knowledge that
such circumstances no longer exist), (i) the obligations of the Lenders to make
LIBOR Rate Loans and the right of the Borrowers to convert any Loan or continue
any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrowers
may select only Base Rate Loans hereunder, and (ii) if any of the Lenders may
not lawfully continue to maintain a LIBOR Rate Loan to the end of the then
current Interest Period applicable thereto as a LIBOR Rate Loan, the applicable
LIBOR Rate Loan shall immediately be converted to a Base Rate Loan for the
remainder of such Interest Period.
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(c) Increased Costs. If, after the date hereof, the introduction
of, or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any of the Lenders (or any of their respective Lending Offices)
with any request or directive (whether or not having the force of law) of such
Governmental Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect to
any LIBOR Rate Loan or any Note or shall change the basis of taxation of
payments to any of the Lenders (or any of their respective Lending Offices) of
the principal of or interest on any LIBOR Rate Loan or any Note or any other
amounts due under this Agreement in respect thereof (except for changes in the
rate of tax on the overall net income of any of the Lenders or any of their
respective Lending Offices imposed by the jurisdiction in which such Lender is
organized or is or should be qualified to do business or such Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
LIBOR Rate Loan or any Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or to reduce the yield or amount of
any sum received or receivable by any of the Lenders under this Agreement or
under the Notes in respect of a LIBOR Rate Loan, then such Lender shall
promptly notify the Administrative Agent, and the Administrative Agent shall
promptly notify the Borrowers of such fact and demand compensation therefor
and, within fifteen (15) days after such notice by the Administrative Agent,
the Borrowers shall pay to such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduction. The
Administrative Agent will promptly notify the Borrowers of any event of which
it has knowledge that will entitle such Lender to compensation pursuant to this
Section 3.7(c); provided, that the Administrative Agent shall incur no
liability whatsoever to the Lenders or the Borrowers in the event it fails to
do so. A certificate of the Administrative Agent setting forth the basis for
determining such additional amount or amounts necessary to compensate such
Lender or Lenders shall be conclusively presumed to be correct save for
manifest error.
SECTION 3.8 Indemnity. The Borrowers jointly and severally shall and
hereby do indemnify each of the Lenders against any loss or expense (including
without limitation any foreign exchange costs) which may arise or be
attributable to each Lender's obtaining, liquidating or employing deposits or
other funds acquired to effect, fund or maintain the Loans (a) as a consequence
of any failure by the Borrowers to make any payment when due of any amount due
hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the
Borrowers to borrow on a date specified therefor in a Notice of Borrowing or
Notice of Continuation/Conversion with respect to any LIBOR Rate Loan or (c)
due to any payment, prepayment or conversion of any
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LIBOR Rate Loan on a date other than the last day of the Interest Period
therefor, including without limitation, any payment, prepayment or conversion
of any LIBOR Rate Loan required to be made in connection with the assignment of
the Loan to an Eligible Assignee during the Initial Interest Rate Period. Each
Lender's calculations of any such loss or expense shall be furnished to the
Borrowers and shall be conclusive, absent manifest error.
SECTION 3.9 Capital Requirements. If either (a) the introduction of,
or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of
law), has or would have the effect of reducing the rate of return on the
capital of, or has affected or would affect the amount of capital required to
be maintained by, any Lender or any corporation controlling such Lender as a
consequence of, or with reference to the Commitments and other commitments of
this type, below the rate which such Lender or such other corporation could
have achieved but for such introduction, change or compliance, then within five
(5) Business Days after written demand by any such Lender, the Borrowers shall
pay to such Lender from time to time as specified by such Lender additional
amounts sufficient to compensate such Lender or other corporation for such
reduction. A certificate as to such amounts submitted to the Borrowers and the
Administrative Agent by such Lender, shall, in the absence of manifest error,
be presumed to be correct and binding for all purposes.
SECTION 3.10 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrowers
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholding, and all liabilities with respect thereto excluding, (i)
in the case of each Lender and the Administrative Agent, income and franchise
taxes imposed by the jurisdiction under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized or is or should be
qualified to do business or any political subdivision thereof and (ii) in the
case of each Lender, income and franchise taxes imposed by the jurisdiction of
such Lender's Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Administrative Agent, (A) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.10) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the amount such party would have received
had no such deductions been made, (B) such Borrower shall make such deductions,
(C) such Borrower shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with Applicable Law, and (D) such
Borrower shall deliver to the Administrative Agent evidence of such payment to
the relevant taxing authority or other authority in the manner provided in
Section 3.10(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay
any present or future stamp, registration, recordation or documentary taxes or
any other similar fees or charges or excise or property taxes, levies of the
United States or any state or political subdivision thereof or any
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applicable foreign jurisdiction which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement, the Loans, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrowers jointly and severally shall and do
hereby indemnify each Lender and the Administrative Agent for the full amount
of Taxes and Other Taxes (including, without limitation, any Taxes and Other
Taxes imposed by any jurisdiction on amounts payable under this Section 3.10)
paid by such Lender or Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of
any payment of Taxes or Other Taxes, the affected Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 12.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence
of payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of
a jurisdiction other than the United States or any state thereof shall deliver
to the Borrowers, with a copy to the Administrative Agent, on the Closing Date
or concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms), properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or deduction for or on account of any United States federal income taxes, and
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be, to establish an exemption from United States backup
withholding taxes. Each such Lender further agrees to deliver to the Borrowers,
with a copy to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or
W-9, or successor applicable forms or manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers, certifying in the case of a Form
1001 or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders such forms
inapplicable or the exemption to which such forms relate unavailable and such
Lender notifies the Borrowers and the Administrative Agent that it is not
entitled to receive payments without deduction or withholding of United States
federal income taxes) and, in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in this Section 3.10 shall survive the payment in full of
the Obligations and the termination of the Commitments.
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ARTICLE IV
CLOSING: CONDITIONS OF CLOSING AND BORROWING
SECTION 4.1 Closing. The closing shall take place at the offices of
Sutherland, Asbill & Brennan at First Union Plaza, 999 Peachtree Street, N.E.,
23rd Floor, Atlanta, Georgia at 10:00 a.m. on the Closing Date.
SECTION 4.2 Conditions to Closing and Initial Loan. The obligations of
the Lenders and the Administrative Agent to close this Agreement and of the
Lenders to make the initial Loans are subject to the satisfaction of each of
the following conditions:
(a) Executed Loan Documents. (i) This Agreement, (ii) the Notes,
(iii) the Intercompany Subordination Agreement, (iv) the Security Agreement,
(v) the Trademark Assignment and (vi) the Pledge Agreement shall have been duly
authorized and executed by the parties thereto in form and substance
satisfactory to the Administrative Agent, shall be in full force and effect and
no default shall exist thereunder, and the Borrowers shall have delivered
original counterparts thereof to the Administrative Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate. The Administrative Agent shall
have received a certificate from the chief executive officer and chief
financial officer of Maxim, on behalf of the Borrowers, in form and substance
reasonably satisfactory to the Administrative Agent, to the effect that all
representations and warranties of the Borrowers contained in this Agreement and
the other Loan Documents are true, correct and complete; that the Borrowers are
not in violation of any of the covenants contained in this Agreement and the
other Loan Documents; that, after giving effect to the transactions
contemplated by this Agreement, no Default or Event of Default has occurred and
is continuing; that the Borrowers have satisfied each of the closing conditions
to be satisfied thereby; and that the Borrowers have filed all required tax
returns and owe no delinquent taxes.
(ii) Solvency Certificate. The Administrative Agent shall
have received a certificate from the chief executive officer and chief
financial officer of Maxim and of each of its Subsidiaries, in form and
substance reasonably satisfactory to the Administrative Agent, to the effect
that Maxim and each Subsidiary of Maxim is, as of the Closing Date, Solvent.
(iii) Certificate of Secretary of each Borrower. The
Administrative Agent shall have received a certificate of the secretary or
assistant secretary of each Borrower certifying, as applicable, that attached
thereto is a true and complete copy of the articles of incorporation or other
charter documents of such Borrower and all amendments thereto, certified as of
a recent date by the appropriate Governmental Authority in its jurisdiction of
incorporation; that attached thereto is a true and complete copy of the bylaws
of such Borrower as in effect on the date of such certification; that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of such Borrower, authorizing the borrowings contemplated hereunder
and the execution, delivery and performance of this Agreement and the other
Loan Documents to which it is a party;
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and as to the incumbency and genuineness of the signature of each officer of
such Borrower executing Loan Documents to which such Borrower is a party.
(iv) Certificates of Good Standing. The Administrative
Agent shall have received certificates as of a recent date of the good standing
of each Borrower under the laws of their respective jurisdictions of
organization.
(v) Initial Borrowing Base Certificate. The initial
Borrowing Base certificate to be delivered by the Borrowers pursuant to Section
6.4, dated as of the Closing Date.
(vi) Accounts Designation Letter. The Accounts Designation
Letter to be delivered by the Borrowers pursuant to Section 2.2, dated as of
the Closing Date.
(vii) Opinions of Counsel. The Administrative Agent shall
have received favorable opinions of counsel to the Borrowers addressed to the
Administrative Agent and Lenders with respect to the Borrowers and such other
Persons, the Loan Documents, the transactions contemplated thereby, regulatory
matters and such other matters as the Administrative Agent and the Lenders may
reasonably request, reasonably satisfactory in form and substance to the
Administrative Agent and Lenders.
(viii) Tax Forms. The Administrative Agent shall have
received copies of the United States Internal Revenue Service forms required by
Section 3.10 hereof.
(c) Collateral.
(i) Filings and Recordings. All filings that are
necessary to perfect the Liens of the Administrative Agent and the Lenders in
the Collateral described in the Security Documents shall have been filed for
recording in all appropriate jurisdictions and the Administrative Agent shall
have received evidence satisfactory to the Administrative Agent that such
security interests constitute valid and perfected first priority Liens therein.
(ii) Pledged Stock. The Administrative Agent shall have
received original stock certificates evidencing the capital stock pledged
pursuant to the Pledge Agreement, together with an appropriate undated stock
power and irrevocable proxy for each certificate duly executed in blank by the
registered owner thereof.
(iii) Lien Searches. The Borrowers shall have delivered the
results of a Lien search of all filings made against such Borrowers under the
Uniform Commercial Code as in effect in any jurisdiction in which any of their
assets are located, indicating among other things that their assets are free
and clear of any Lien except for Permitted Liens.
(iv) Lien Searches. The Borrowers shall have delivered the
results of a search of the real property records in all jurisdictions in which
any of their real property is located, indicating that the Borrowers hold title
to all real property of Borrowers free and clear of all Liens except for
Permitted Liens.
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(v) Insurance. The Administrative Agent shall have
received certificates of insurance and certified copies of insurance policies
in the form required under Section 7.3 and the Security Documents and otherwise
in form and substance reasonably satisfactory to the Administrative Agent.
(d) Consents; No Adverse Change.
(i) Governmental and Third Party Approvals. All necessary
approvals, authorizations and consents, if any be required, of any Person and
of all Governmental Authorities and courts having jurisdiction with respect to
the execution and delivery of this Agreement and the other Loan Documents shall
have been obtained.
(ii) Permits and Licenses. All permits and licenses,
including permits and licenses required under Applicable Laws, necessary to the
conduct of business by the Borrowers and their Subsidiaries shall have been
obtained.
(iii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any Governmental Authority to enjoin, restrain, or prohibit,
or to obtain substantial damages in respect of, or which is related to or
arises out of this Agreement or the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby, or which, in the
Administrative Agent's reasonable discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement and such other Loan
Documents.
(iv) No Material Adverse Change. Since January 31, 1996,
there shall not have occurred any material adverse change in the condition
(financial or otherwise), operations, properties, business or prospects of
Maxim, Image or any of their respective Subsidiaries, or any event or condition
that has had or could be reasonably expected to have a Material Adverse Effect.
(v) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
(e) Financial Matters.
(i) Financial Statements. The Administrative Agent and
each Lender shall have received recent annual and interim financial statements
and other financial information with respect to Maxim and its Subsidiaries
prepared in accordance with GAAP. Without limitation of the foregoing, the
Administrative Agent and each Lender shall have received (A) audited financial
statements for Maxim and its Subsidiaries for the Fiscal Year ended January 31,
1996 and unaudited financial statements for Maxim and its Subsidiaries for the
six month period ended July 31, 1996, and (B) unaudited financial statements
for Image for the Fiscal Year ended June 30, 1996.
(ii) Financial Condition Certificate. Maxim, on behalf of
the Borrowers, shall have delivered to the Administrative Agent a certificate,
in form and substance satisfactory to the Administrative Agent, and certified
as accurate in all material respects by the chief executive officer
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or chief financial officer of Maxim, to the effect that (A) attached thereto is
a pro forma balance sheet of Maxim and its Subsidiaries setting forth on a pro
forma basis the financial condition of Maxim and its Subsidiaries on a
Consolidated basis as of that date, reflecting on a pro forma basis the effect
of the transactions contemplated herein, including, without limitation, the
Image Acquisition, all material fees and expenses in connection therewith, and
evidencing compliance on a pro forma basis with the covenants contained in
Articles VIII and IX hereof, (B) the financial projections previously delivered
to the Administrative Agent represent the good faith opinions of the Borrowers
and senior management thereof as to the projected results contained therein,
and (C) that Maxim and each of its Subsidiaries singly (i) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as
they mature, (ii) owns property having a value, both at fair valuation and at
present fair saleable value, greater than the amount required to pay its
probable liabilities (including contingencies and its liabilities with respect
to the Obligations), and (iii) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature.
(iii) Minimum Combined EBITDAR. Consolidated EBITDAR of
Maxim and its Subsidiaries for the six month period ending July 31, 1996, when
added to the Consolidated EBITDAR of Image for the six month period ending July
31, 1996, shall be equal to or greater than $14,000,000.
(iv) Payment at Closing. There shall have been paid by the
Borrowers to the Administrative Agent and the Lenders the fees set forth or
referenced in Section 3.3 and any other accrued and unpaid fees or commissions
due hereunder (including, without limitation, legal fees and expenses), and to
any other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges
in connection with the execution, delivery, recording, filing and registration
of any of the Loan Documents. The Administrative Agent shall have received duly
authorized and executed copies of the Term Sheet referred to in Section 3.3(b).
(f) Acquisition of Image. The Image Acquisition shall have been
consummated on terms and pursuant to documentation satisfactory to the
Administrative Agent and the Lenders.
(g) Miscellaneous.
(i) Refinanced Facilities. The Administrative Agent shall
have received evidence, in form and substance reasonably satisfactory to the
Administrative Agent, that with proceeds of the Loans (A) the obligations of
Maxim and its Subsidiaries evidenced by the Loan Agreement dated February 2,
1995 among Maxim, its Subsidiaries party thereto and First Union have been
fully paid, satisfied and discharged and (B) the obligations of Image under the
Amended and Restated Credit Agreement among Image, The First National Bank of
Boston, as Agent, and the lenders party thereto dated June 20, 1995, have been
fully paid, satisfied and discharged.
(ii) Notice of Borrowing. The Administrative Agent shall
have received written instructions from Maxim, on behalf of the Borrowers,
directing the payment of any proceeds of Loans made under this Agreement that
are to be made on the Closing Date.
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(iii) Proceedings and Documents. All opinions, certificates
and other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Lenders. The Lenders shall have received copies of all other
instruments and other evidence as the Lenders may reasonably request, in form
and substance reasonably satisfactory to the Lenders, with respect to the
transactions contemplated by this Agreement and the taking of all actions in
connection therewith.
(iv) Due Diligence and Other Documents. The Borrowers
shall have delivered to the Administrative Agent such other documents,
certificates and opinions as the Administrative Agent reasonably request.
SECTION 4.3 Conditions to All Loans. The obligations of the Lenders to
make any Loan is subject to the satisfaction of the following conditions
precedent on the relevant borrowing date:
(i) Continuation of Representations and Warranties. The
representations and warranties contained in Article V shall be true and correct
on and as of such borrowing date with the same effect as if made on and as of
such date, except to the extent that such representations and warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct on and as of such earlier date.
(ii) No Existing Default. No Default or Event of Default
shall have occurred and be continuing hereunder on the borrowing date with
respect to such Loan or after giving effect to the Loans to be made on such
date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BORROWERS
SECTION 5.1 Representations and Warranties. To induce the
Administrative Agent and the Lenders to enter into this Agreement and to induce
the Lenders to make the Loans, the Borrowers hereby jointly and severally
represent and warrant to the Administrative Agent and the Lenders that:
(a) Organization; Power; Qualification. Each of Maxim and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, has the power and
authority to own its properties and to carry on its business as now being
conducted and is duly qualified and authorized to do business in each
jurisdiction where its business requires such qualification and authorization.
The jurisdictions in which Maxim and its Subsidiaries are organized and
qualified to do business are described on Schedule 5.1(a).
(b) Ownership. Each Subsidiary of Maxim is listed on Schedule
5.1(b). The capitalization of Maxim and each of its Subsidiaries consists of
the number of shares, authorized, issued and outstanding, of such classes and
series, with or without par value, described on Schedule
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5.1(b). All outstanding shares have been duly authorized and validly issued and
are fully paid and nonassessable. The shareholders of Maxim and each of its
Subsidiaries and the number of shares owned by each are described on Schedule
5. 1 (b). There are no outstanding stock purchase warrants, subscriptions,
options, securities, instruments or other rights of any type or nature
whatsoever, which are convertible into, exchangeable for or otherwise provide
for or permit the issuance of capital stock of Maxim or any of its
Subsidiaries, except as described on Schedule 5.1(b).
(c) Authorization of Agreement, Loan Documents and Borrowing.
Each of Maxim and its Subsidiaries has the right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which it is a party in accordance with their respective terms. This
Agreement and each of the other Loan Documents have been duly executed and
delivered by the duly authorized officers of Maxim and each of its Subsidiaries
party thereto and each such document constitutes the legal, valid and binding
obligation of Maxim or its Subsidiary party thereto, enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar state or federal debtor
relief laws from time to time in effect which affect the enforcement of
creditors' rights in general and the availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with
Laws, Etc. The execution, delivery and performance by Maxim and each of its
Subsidiaries of the Loan Documents to which each such Person is a party in
accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of time,
the giving of notice or otherwise, (i) except as set forth on Schedule 5.1(d)
hereto, require any Governmental Approval or violate any Applicable Law
relating to Maxim or any of its Subsidiaries, (ii) conflict with, result in a
breach of or constitute a default under the articles of incorporation, bylaws
or other organizational documents of Maxim or any of its Subsidiaries or any
Material Contract to which such Person is a party or by which any of its
properties may be bound or any Governmental Approval relating to such Person or
(iii) result in or require the creation or imposition of any Lien upon or with
respect to any material property now owned or hereafter acquired by such Person
other than Liens arising under the Loan Documents.
(e) Compliance with Law; Governmental Approvals. Each of Maxim and
its Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business and (ii) is in compliance with each
Governmental Approval applicable to it and in compliance with all other
Applicable Laws relating to it or any of its respective properties. Each such
Governmental Approval is in full force and effect, is final and not subject to
review on appeal and is not the subject of any pending or, to the best
knowledge of the Borrowers, threatened attack by direct or collateral
proceeding.
(f) Tax Returns and Payments. Each of Maxim and its Subsidiaries
has duly filed or caused to be filed all federal, state, local and other tax
returns required by Applicable Law to be filed, and has paid, or made adequate
provision for the payment of, all federal, state, local and other taxes,
assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable, except where the payment
of such tax is being disputed in good
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faith and adequate reserves have been established in accordance with GAAP. No
Governmental Authority has asserted any Lien or other claim against Maxim or
any Subsidiary thereof with respect to material unpaid taxes which has not been
discharged or resolved or is not being contested in good faith. The charges,
accruals and reserves on the books of Maxim and any of its Subsidiaries in
respect of federal, state, local and other taxes for all Fiscal Years and
portions thereof are in the judgment of the Borrowers adequate, and the
Borrowers do not anticipate any additional material taxes or assessments for
any of such years.
(g) Environmental Matters. The properties of Maxim and its
Subsidiaries are in compliance in all material respects with all applicable
Environmental Laws. There is no contamination at, under or about such
properties or such operations which could interfere in any material respect
with the continued operation of such properties or, except as set forth on
Schedule 5.1(g), impair in any material respect the fair saleable value
thereof. Neither Maxim nor any of its Subsidiaries has received any written
notice of material violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of its properties or the operations
conducted in connection therewith, nor does Maxim nor any of its Subsidiaries
have knowledge or reason to believe that any such notice will be received or is
being threatened.
(h) ERISA.
(i) Neither any Borrower nor any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Employee Benefit
Plans other than those identified on Schedule 5.1(h);
(ii) Each Borrower and each ERISA Affiliate is in material
compliance with all applicable provisions of ERISA and all other laws
applicable to any Employee Benefit Plans and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except
for any required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan
that is intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each trust
related to such plan has been determined to be exempt under Section 501(a) of
the Code. Each such Employee Benefit Plan has been operated in a manner to
preserve such qualification. No liability has been incurred by any Borrower or
any ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Employee Benefit Plan or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code) been
incurred (without regard to any waiver granted under Section 412 of the Code) ,
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has any Borrower or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and owing
as required by Section 412 of the Code, Section 302 of ERISA or the terms of
any Pension Plan prior to the due dates of such contributions under Section 412
of the Code or Section 302 of ERISA, nor has there
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been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a)
of ERISA with respect to any Pension Plan;
(iv) Neither any Borrower nor any ERISA Affiliate has: (A)
engaged in a nonexempt prohibited transaction described in Section 406 of ERISA
or Section 4975 of the Code; (B) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid; (C) failed to make a required contribution
or payment to a Multiemployer Plan; or (D) failed to make a required
installment or other required payment under Section 412 of the Code;
(v) The execution and delivery by Borrowers of this
Agreement and the borrowings hereunder will not involve any prohibited
transaction under ERISA or the Code;
(vi) No Termination Event has occurred or is reasonably
expected to occur; and
(vii) No material proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of any Borrower after due
inquiry, threatened concerning or involving any (A) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) maintained or contributed to by any
Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(i) Margin Stock. Neither Maxim nor any Subsidiary thereof is
engaged principally or as one of its significant activities in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" (as each such term is defined or used in Regulations G and U of the
Board of Governors of the Federal Reserve System). No part of the proceeds of
any of the Loans will be used for purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the provisions
of Regulation G, T, U or X of such Board of Governors.
(j) Government Regulation. Neither Maxim nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither Maxim nor any Subsidiary thereof is, or after
giving effect to any Loan will be, a "Holding Company" or a "Subsidiary
Company" of a "Holding Company" or an "Affiliate" of a "Holding Company" within
the respective meanings of each of the quoted terms of the Public Utility
Holding Company Act of 1935 as amended, or any other Applicable Law which
materially limits its ability to incur or consummate the transactions
contemplated hereby.
(k) Patents, Copyrights and Trademarks. Each of Maxim and its
Subsidiaries owns or possesses all patent, copyright and trademark rights which
are required to conduct its business without infringing upon any validly
asserted rights of others. No event has occurred which permits, or after notice
or lapse of time or both would permit, the revocation or termination of any
such rights. Except as set forth on Schedule 5.1(k), neither Maxim nor any of
its Subsidiaries has been threatened with any litigation regarding patents,
copyrights or trademarks that would present a material impediment to the
business of any such Person.
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(l) Material Contracts. Schedule 5.1(1) sets forth a complete and
accurate list of all Material Contracts of Maxim and its Subsidiaries in effect
as of the Closing Date not listed on any other Schedule hereto; other than as
set forth in Schedule 5.1(1), each of Maxim and any Subsidiary thereof party
thereto has performed all of its obligations under such Material Contracts and,
to the best knowledge of the Borrowers, each other party thereto is in
compliance with each such Material Contract, and each such Material Contract
is, and after giving effect to the consummation of the transactions
contemplated by the Loan Documents will be, in full force and effect in
accordance with the terms thereof. Maxim and its Subsidiaries have delivered to
the Administrative Agent a true and complete copy of each Material Contract
required to be listed on Schedule 5.1(1).
(m) Employee Relations. Each of Maxim and its Subsidiaries is not,
except as set forth on Schedule 5.1(m), party to any collective bargaining
agreement nor has any labor union been recognized as the representative of its
employees. Maxim knows of no pending, threatened or contemplated strikes, work
stoppage or other collective labor disputes involving its employees or those of
its Subsidiaries.
(n) Burdensome Provisions. Neither Maxim nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable future
could be reasonably expected to have a Material Adverse Effect. Maxim and its
Subsidiaries do not presently anticipate that future expenditures needed to
meet the provisions of any statutes, orders, rules or regulations of a
Governmental Authority will be so burdensome as to have a Material Adverse
Effect.
(o) Financial Statements. All balance sheets, statements of
income, retained earnings, stockholders' equity and cash flows, and all other
financial information of Maxim and its Subsidiaries which have been furnished
by the Borrowers to the Administrative Agent and the Lenders for the purposes
of or in connection with this Agreement, including without limitation the
financial statements described in Section 4.2 (e) , have been prepared in
accordance with GAAP consistently applied (except to the extent pro forma
statements are based upon reasonable estimates in accordance with Section
4.2(e)(ii)) throughout the periods involved and present fairly in all material
respects the matters reflected therein subject, in the case of unaudited
statements, to changes resulting from normal year-end audit adjustments and
items that would be disclosed in footnotes to the audited statements. As of the
Closing Date, except as set forth on Schedule 5.1(o), neither Maxim nor any of
its Subsidiaries has any contingent liability or liability for taxes, long-term
leases or unusual forward or long-term commitments which are not reflected in
the financial statements described above or in the notes thereto.
(p) No Material Adverse Change. Since June 30, 1995, there has
been no material adverse change in the condition (financial or otherwise),
operations, properties, business or prospects of Image, and since January 31,
1996, there has been no material adverse change in the condition (financial or
otherwise), operations, properties, business or prospects of Maxim and its
Subsidiaries other than Image, including any event or condition that has had or
is reasonably likely to have a Material Adverse Effect.
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(q) Solvency. As of the Closing Date and after giving effect to
each Loan made hereunder, each of Maxim and each of its Subsidiaries will be
Solvent.
(r) Titles to Properties. Each of Maxim and its Subsidiaries has
such title to the real property owned or leased by it as is necessary or
desirable to the conduct of its business and good and marketable title to all
of its personal property sufficient to carry on its business as presently
conducted, except such property as has been disposed of by Maxim or its
Subsidiaries subsequent to such date which dispositions have been in the
ordinary course of business or as otherwise expressly permitted hereunder.
Schedule 5.1(r) hereto sets forth the address of all real property owned or
leased by a Borrower (and if leased, the landlord thereof).
(s) Liens. None of the properties and assets of Maxim or any
Subsidiary thereof is subject to any Lien, except in each case Permitted Liens.
No financing statement under the Uniform Commercial Code of any state which
names Maxim or any Subsidiary thereof or any of their respective trade names or
divisions as debtor and which has not been terminated, has been filed in any
state or other jurisdiction and neither Maxim nor any Subsidiary thereof has
signed any such financing statement or any security agreement authorizing any
secured party thereunder to file any such financing statement, except to
perfect Permitted Liens.
(t) Debt and Contingent Obligations. Schedule 5.1(t) is a complete
and correct listing of all Debt and Contingent Obligations of Maxim and its
Subsidiaries. Each of Maxim and its Subsidiaries have performed and are in
material compliance with all of the terms of such Debt and Contingent
Obligations and all instruments and agreements relating thereto, and no default
or event of default, or event or condition which with notice or lapse of time
or both would constitute such a default or event of default on the part of
Maxim or its Subsidiaries exists with respect to any such Debt or Contingent
Obligation.
(u) Litigation. Except as set forth on Schedule 5.1(u), there are
no actions, suits or proceedings pending nor, to the knowledge of the
Borrowers, threatened against or in any other way relating adversely to or
affecting Maxim or any Subsidiary thereof or any of their respective properties
in any court or before any arbitrator of any kind or before or by any
Governmental Authority which, if adversely determined, is reasonably likely to
have a Material Adverse Effect.
(v) Franchise and License Fees. Maxim and each of its Subsidiaries
have paid all franchise, license or other fees and charges which have become
due pursuant to any Governmental Approval in respect of its business and has
made appropriate provision as is required by GAAP for any such fees and charges
which have accrued.
(w) Absence of Defaults. No event has occurred or is continuing
which constitutes a Default or an Event of Default, or which constitutes, or
which with the passage of time or giving of notice or both would constitute, a
default or event of default by Maxim or any Subsidiary thereof under any
Material Contract or judgment, decree or order to which Maxim or its
Subsidiaries is a party or by which Maxim or its Subsidiaries or any of their
respective properties may be bound or which would require Maxim or its
Subsidiaries to make any payment thereunder prior to the scheduled maturity
date therefor.
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(x) Accuracy and Completeness of Information. All written
information, reports and other papers and data produced by or on behalf of
Maxim or any Subsidiary thereof and furnished to the Lenders were, at the time
the same were so furnished, complete and correct in all material respects. No
document furnished or written statement made to the Administrative Agent or the
Lenders by Maxim or any Subsidiary thereof in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan Documents
contains or will contain any untrue statement of a fact material to the
creditworthiness of Maxim or its Subsidiaries or omits or will omit to state a
material fact necessary in order to make the statements contained therein not
misleading. Maxim is not aware of any facts which it has not disclosed in
writing to the Administrative Agent having a Material Adverse Effect, or
insofar as Maxim can now foresee, could reasonably be expected to have a
Material Adverse Effect.
SECTION 5.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article V and all
representations and warranties contained in any certificate or in any of the
Loan Documents (including without limitation, any such representation or
warranty made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Closing Date, shall survive the Closing Date and shall not be
waived by the execution and delivery of this Agreement, any investigation made
by or on behalf of the Lenders or any borrowing hereunder.
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.10 hereof, the Borrowers will
furnish or cause to be furnished to the Administrative Agent and each Lender at
their respective addresses set forth in Section 12.1 hereof, or such other
address as may be designated by such Administrative Agent or Lenders from time
to time:
SECTION 6.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in
any event within forty-five (45) days after the end of each fiscal quarter, an
unaudited Consolidated and consolidating balance sheet of Maxim and its
Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated
and consolidating statements of income, retained earnings and cash flows for
the fiscal quarter then ended and that portion of the Fiscal Year then ended,
including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year for
the portion of the Fiscal Year then ended and prepared by Maxim in accordance
with GAAP, and certified by the chief financial officer of Maxim to present
fairly in all material respects the financial condition of Maxim and its
Subsidiaries as of their respective dates and the results of operations of
Maxim and its Subsidiaries for the respective periods then ended.
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(b) Annual Financial Statements. As soon as practicable and in any
event within ninety (90) days after the end of each Fiscal Year, an unaudited
consolidating balance sheet of Maxim and its Subsidiaries and an audited
Consolidated balance sheet of Maxim and its Subsidiaries as of the close of
such Fiscal Year and audited Consolidated statements of income, retained
earnings and cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by an
independent certified public accounting firm of nationally recognized standing
in accordance with GAAP, and accompanied by a report thereon by such certified
public accountants that is not qualified with respect to scope limitations
imposed by Maxim or any of its Subsidiaries or with respect to accounting
principles followed by Maxim or any of its Subsidiaries not in accordance with
GAAP.
(c) Annual Business Plan and Financial Projections. As soon as
practicable and in any event within thirty (30) days prior to the beginning of
each Fiscal Year, a business plan of Maxim and its Subsidiaries for the ensuing
four fiscal quarters, such plan to include, on a quarterly basis, the
following, prepared in GAAP format: a quarterly operating and capital budget, a
projected income statement, statement of cash flows and balance sheet and a
report containing management's discussion and analysis of such projections
(such business plan and projections, the "Projections"), accompanied by a
certificate from the chief financial officer of Maxim to the effect that, to
the best of such officer's knowledge, the Projections are good faith estimates
of the financial condition and operations of Maxim and its Subsidiaries for
such four quarter period.
SECTION 6.2 Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 6.1(a) or (b), a certificate of
the chief financial officer of Maxim in the form of Exhibit D attached hereto
(an "Officer's Compliance Certificate"):
(a) stating that such officers have reviewed such financial
statements and such statements fairly present the financial condition of Maxim
and its Subsidiaries as of the dates indicated and the results of their
operations and cash flows for the periods indicated;
(b) stating that to such officer's knowledge, based on a
reasonable examination, no Default or Event of Default exists, or, if such is
not the case, specifying such Default or Event of Default and its nature, when
it occurred, whether it is continuing and the steps being taken by the
Borrowers with respect to such Default or Event of Default; and
(c) setting forth as at the end of such fiscal quarter or Fiscal
Year, as the case may be, the calculations required to establish whether or not
Maxim and its Subsidiaries were in compliance with the financial covenants set
forth in Article VIII hereof as at the end of each respective period, the
calculation of Excess Cash Flow for such Fiscal Year, the calculation of any
mandatory prepayments of the Term Loans required by Section 2.6(c) hereof and
the calculation of the Applicable Margin pursuant to Section 3.1(d) as at the
end of each respective period.
SECTION 6.3 Accountants' Certificate. At each time financial
statements are delivered pursuant to Section 6.1(b), a certificate of the
independent public accountants certifying such financial statements addressed
to the Administrative Agent for the benefit of the Lenders:
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(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of any
Default or Event of Default or, if such is not the case, specifying such
Default or Event of Default and its nature and period of existence; and
(b) including the calculations prepared by such accountants
required to establish whether or not Maxim and its Subsidiaries are in
compliance with the financial covenants set forth in Article VIII hereof as at
the end of each respective period.
SECTION 6.4 Borrowing Base Certificate. Not later than 15 days after
the end of each calendar month, a certificate in form and substance reasonably
satisfactory to the Administrative Agent and executed by the chief financial
officer of Maxim, setting forth the Borrowers' computation of the Borrowing
Base as of the end of the prior calendar month.
SECTION 6.5 Other Reports.
(a) Promptly upon receipt thereof, copies of any management report
and any management responses thereto submitted to any Borrower or its Board of
Directors by its independent public accountants in connection with their
auditing function;
(b) Such other information regarding the operations, business
affairs and financial condition of Maxim or any of its Subsidiaries as the
Administrative Agent or the Required Lenders may request; and
(c) All filings and communications by, or in connection with and
received by, Maxim, with or from the SEC (other than filings made by
individuals and not involving a Change in Control on Forms 3 or 4 pursuant to
Section 16 of the Exchange Act) and all notices and proxy and other information
provided by Maxim to its shareholders.
SECTION 6.6 Notice of Litigation and Other Matters. Prompt (but in no
event later than three (3) days after an officer of any Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all material proceedings and
investigations by or before any Governmental Authority and all material actions
and proceedings in any court or before any arbitrator against or involving
Maxim or any Subsidiary thereof or any of their respective properties, assets
or businesses;
(b) any notice of any material violation received by Maxim or any
Subsidiary thereof from any Governmental Authority, including without
limitation, any notice of a material violation of Environmental Laws;
(c) any labor controversy that has resulted in, or could
reasonably be expected to result in, a strike or other work action against
Maxim or any Subsidiary thereof;
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(d) any attachment, judgment, lien, levy or order exceeding the
Material Judgment Amount that may be assessed against or threatened against
Maxim or any of its Subsidiaries;
(e) any Default or Event of Default, or any event which
constitutes or which with the passage of time or giving of notice or both would
constitute a default or event of default under any Material Contract to which
Maxim or any of its Subsidiaries is a party or by which Maxim or any Subsidiary
thereof or any of their respective properties may be bound;
(f) (i) the failure of any Borrower or any ERISA Affiliate to make
a required installment or payment under Section 302 of ERISA or Section 412 of
the Code by the due date, (ii) any Termination Event or "prohibited
transaction," as such term is defined in Section 406 of ERISA or Section 4975
of the Code, in connection with any Employee Benefit Plan or any trust created
thereunder, along with a description of the nature thereof, what action such
Borrower has taken, is taking or proposes to take with respect thereto and,
when known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto, (iii) all notices
received by any Borrower or any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (iv) all notices received by any Borrower or any ERISA Affiliate
from a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA, (v) any Borrower
obtaining knowledge or reason to know that Maxim or any ERISA Affiliate has
filed or intends to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041(c) of ERISA, and (vi)
the requirement to file any notice with the Internal Revenue Service,
Department of Labor, PBGC or any plan participant, beneficiary or alternate
payee required under Sections 101(d), 302(f)(4), 303 and 307 of ERISA or under
Section 401(a)(29) of the Code with respect to any Employee Benefit Plan of any
Borrower or any ERISA Affiliate; or
(g) any event which makes any of the representations set forth in
Section 5.1 inaccurate in any material respect.
SECTION 6.7 Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of any Borrower
to any Agent or Lender whether pursuant to this Article VI or any other
provision of this Agreement, or any of the Security Documents, shall be, at the
time the same is so furnished, complete and correct in all material respects
based on the applicable Borrower's knowledge thereof.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 12.10, Maxim and each Borrower
will, and will cause each of its Subsidiaries to:
SECTION 7.1 Preservation of Corporate Existence and Related Matters.
Except as permitted by Section 9.5, preserve and maintain its separate
corporate existence and all rights,
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franchises, licenses and privileges necessary to the conduct of its business,
and qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction where its business requires such qualification
and authorization, if failure to qualify or to remain so qualified would have
or could reasonably be expected to have a Material Adverse Effect with respect
to Maxim or any of its Subsidiaries.
SECTION 7.2 Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including material
copyrights, patents, trade names and trademarks; maintain in good working order
and condition (reasonable wear and tear excepted) all buildings, equipment and
other tangible real and personal property; and from time to time make or cause
to be made all renewals, replacements and additions to such property necessary
in the reasonable judgement of such Borrower for the conduct of its business,
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 7.3 Insurance. In addition to the requirements set forth in
the Security Documents, maintain insurance with financially sound and reputable
insurance companies against such risks and in such amounts as are customarily
maintained by similar businesses and as may be required by Applicable Law, and
on the Closing Date and from time to time thereafter deliver to the
Administrative Agent upon its request a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
SECTION 7.4 Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete in all material respects) as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP and in compliance with the regulations of any Governmental Authority
having jurisdiction over it or any of its properties.
SECTION 7.5 Payment and Performance of Obligations. Pay and perform
all Obligations under this Agreement and the other Loan Documents and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that such Borrower and its Subsidiaries may contest any
item described in clauses (a) and (b) hereof in good faith so long as adequate
reserves are maintained with respect thereto in accordance with GAAP.
SECTION 7.6 Compliance With Laws and Approvals. Observe and remain in
material compliance with all Applicable Laws and maintain in full force and
effect all material Governmental Approvals, in each case applicable or
necessary to the conduct of its business.
SECTION 7.7 Environmental Laws. In addition to and without limiting
the generality of Section 7.6, (a) comply in all material respects with, and
use its best efforts to ensure such compliance by all of its tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply with and maintain, and use its best efforts to ensure that all of its
tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications,
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registrations or permits required by applicable Environmental Laws; (b) conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws, and
timely comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws; and (c) defend, indemnify and hold
harmless the Administrative Agent and the Lenders, and their respective
parents, Subsidiaries, Affiliates, employees, agents, officers and directors,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations of such Borrower or its subsidiaries, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney's and consultant's fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of or relate
to the gross negligence or willful misconduct of the party seeking
indemnification therefor.
SECTION 7.8 Compliance with ERISA and the Code. In addition to and
without limiting the generality of Section 7.6, make timely payment of
contributions required to meet the minimum funding standards set forth in ERISA
or the Code with respect to any Employee Benefit Plan; not take any action or
fail to take action the result of which could be a liability to the PBGC or to
a Multiemployer Plan; not participate in any prohibited transaction that could
result in any civil penalty under ERISA or tax under the Code; furnish to the
Administrative Agent upon the Administrative Agent's request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Administrative Agent; and operate each Employee Benefit Plan in such a
manner that such plan will not incur any tax liability under Section 4980B of
the Code or any liability to any qualified beneficiary as defined in Section
4980B of the Code.
SECTION 7.9 Compliance With Agreements. Comply in all material
respects with each term, condition and provision of all leases, agreements and
other instruments entered into in the conduct of its business if noncompliance
would have or could reasonably be expected to have a Material Adverse Effect
with respect to Maxim or any of its Subsidiaries, including, without
limitation, any Material Contract; provided, that such Borrower or Subsidiary
may contest any such lease, agreement or other instrument in good faith so long
as adequate reserves are maintained in accordance with GAAP.
SECTION 7.10 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date
and in lines of business reasonably related thereto.
SECTION 7.11 Visits and Inspections. Upon reasonable notice therefrom
and during normal business hours, permit representatives of any of the
Administrative Agent or Lenders, from time to time, to visit and inspect its
properties; inspect, audit and make extracts from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results of
operations and business prospects.
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SECTION 7.12 Subsidiaries. Upon the creation of any Subsidiary
permitted by this Agreement, cause to be executed and delivered to the
Administrative Agent: (a) a Joinder Agreement and the documents referred to
therein, (b) the supplement substantially in the form attached to the Security
Agreement, (c) the supplement substantially in the form attached to the Pledge
Agreement, or if the owner of such Subsidiary is not Maxim, a pledge agreement
substantially in the form of the Pledge Agreement executed by such owner with
such modifications thereto as requested by the Administrative Agent, (d) such
other documents reasonably requested by the Administrative Agent consistent
with the terms of this Agreement which provide that such Subsidiary shall
become a Borrower hereunder bound by all of the terms, covenants and agreements
contained in the Loan Documents and that the assets of such Subsidiary shall
become Collateral for the Obligations and (e) such other documents as the
Administrative Agent shall reasonably request, including without limitation,
officers' certificates, financial statements, opinions of counsel, board
resolutions, charter documents, certificates of existence and authority to do
business and any other closing certificates and documents described in Section
4.2.
SECTION 7.13 Hedging Agreement. Not later than one hundred twenty
(120) days after the date hereof, execute Hedging Agreements with respect to
interest rate exposure under this Agreement with an aggregate weighted average
duration of at least two years and an aggregate notional principal amount
thereunder equal to at least fifty percent (50%) of the Aggregate Commitment.
SECTION 7.14 Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as any Agent or
Lender may reasonably require to document and consummate the transactions
contemplated hereby and to vest completely in and insure each Agent and the
Lenders their respective rights under this Agreement, the Notes and the other
Loan Documents.
ARTICLE VIII
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.10 hereof, Maxim and its
Subsidiaries on a Consolidated basis will not:
SECTION 8.1 Funded Debt to Total Capitalization. As of any fiscal
quarter end, permit the ratio of (a) Consolidated Funded Debt of Maxim and its
Subsidiaries as of such date to (b) the sum of (i) Consolidated Net Worth of
Maxim and its Subsidiaries plus (ii) Consolidated Funded Debt of Maxim and its
Subsidiaries, each as of such date, to exceed the following ratios for the
fiscal quarters ending during the following time periods:
Period Ratio
------ -----
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<TABLE>
<S> <C>
Closing Date through and including 0.65 to 1.0
October 31, 1997
November 1, 1997 through and including 0.60 to 1.0
October 31, 1998
November 1, 1998 and thereafter 0.55 to 1.0
</TABLE>
SECTION 8.2 Funded Debt to EBITDAR. As of any fiscal quarter end,
permit the ratio of (a) Consolidated Funded Debt of Maxim and its Subsidiaries
as of such date to (b) Consolidated EBITDAR of Maxim and its Subsidiaries (the
"Debt to EBITDAR Ratio") for the period of four (4) consecutive fiscal quarters
ending on or immediately prior to such date (except in the case of the
measurement period ending October 31, 1996, in which case EBITDAR will be
calculated on an annualized pro forma basis based on the actual combined
EBITDAR for Maxim and Image for the nine month period ending October 31, 1996,
and in the case of the measurement periods ending January 31, 1997, April 30,
1997 and July 31, 1997, in which case EBITDAR will be calculated based on
combined EBITDAR for Maxim and Image for the periods occurring before the
consummation of the Image Acquisition and on a consolidated basis for Maxim and
its Subsidiaries for the periods occurring after the consummation of the Image
Acquisition), to exceed the following ratios for the fiscal quarters ending
during the following time periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through and including 4.5 to 1.0
October 31, 1996
November 1, 1996 through and including 4.0 to 1.0
January 31, 1997
February 1, 1997 through and including 3.5 to 1.0
October 31, 1997
November 1, 1997 through and including 3.25 to 1.0
October 31, 1998
November 1, 1998 through and including 3.0 to 1.0
October 31, 1999
November 1, 1999 and thereafter 2.50 to 1.0
</TABLE>
SECTION 8.3 Tangible Net Worth. Permit Tangible Net Worth of Maxim and
its Subsidiaries at any time to be less than the sum of (a) $60,000,000, plus
(b) fifty percent (50%) of Net Income of Maxim and its Subsidiaries for each
fiscal quarter occurring after July 31, 1996, plus (c) the total amount of Net
Cash Proceeds received by Maxim or any of its Subsidiaries from the sale of any
equity securities during the period from the Closing Date to such time.
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SECTION 8.4 Interest Coverage Ratio. As of any fiscal quarter end,
permit the ratio of (a) (i) Net Income of Maxim and its Subsidiaries for the
period of four (4) consecutive fiscal quarters ending on or immediately prior
to such date, plus (ii) income and franchise taxes paid in cash during such
period, plus (iii) Interest Expense paid in cash during such period, to (b)
Interest Expense for such period (except in the case of the measurement period
ending October 31, 1996, in which case Net Income and Consolidated Interest
Expense will be calculated on an annualized pro forma basis based on the actual
combined Net Income and actual combined Interest Expense for Maxim and Image
for the nine month period ending October 31, 1996, and in the case of the
measurement periods ending January 31, 1997, April 30, 1997 and July 31, 1997,
in which case Net Income and Interest Expense will be calculated based on
combined EBITDAR for Maxim and Image for the periods occurring before the
consummation of the Image Acquisition and on a consolidated basis for Maxim and
its Subsidiaries for the periods occurring after the consummation of the Image
Acquisition), to be less than the following ratios for the fiscal quarters
ending during the following time periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through and including 1.75 to 1.0
October 31, 1996
November 1, 1996 through and including 2.0 to 1.0
October 31, 1998
November 1, 1998 and thereafter 2.5 to 1.0
</TABLE>
SECTION 8.5 Capital Expenditures. Permit Capital Expenditures to
exceed $18,000,000 for any period of four (4) consecutive fiscal quarters
ending on or prior to January 31, 1998.
SECTION 8.6 Fixed Charge Coverage Ratio. As of any fiscal quarter end
commencing with the fiscal quarter ending April 30, 1998, permit the ratio of
(a) (i) EBITDAR of Maxim and its Subsidiaries for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date less
(ii) Capital Expenditures during such period, to (b) Fixed Charges of Maxim and
its Subsidiaries for such period, to be less than 1.10 to 1.00.
ARTICLE IX
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.10 hereof, Maxim will not and
will not permit any of its Subsidiaries to:
SECTION 9.1 Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except (a) the Obligations, (b) Debt incurred in connection with
a Hedging Agreement with a counterparty
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and upon terms and conditions reasonably satisfactory to the Administrative
Agent, (c) existing Debt set forth on Schedule 9.1, (d) Debt consisting of
Contingent Obligations permitted by Section 9.2, (e) Debt of any Borrower to
any other Borrower, but only if such Debt is subordinated to the Obligations
pursuant to the terms and conditions of the Intercompany Subordination
Agreement, (f) Debt constituting trade payables and accruals arising in the
ordinary course of business of Maxim and its Subsidiaries, (g) Debt for which
any Person acquired by Maxim in a transaction permitted by Section 9.4(g) is
obligated, but only if such Debt has as its sole obligor such acquired Person,
(h) purchase money Debt incurred in connection with a purchase or acquisition
permitted by Section 9.4(g), and (i) purchase money Debt secured only by an
interest in the property being acquired, but only if the amount of such
purchase money Debt, when aggregated with all other purchase money Debt
incurred by Maxim or any of its Subsidiaries pursuant to subsections 9.1(h) and
9.1(i) during the term of this Agreement, does not exceed $1,000,000.
SECTION 9.2 Limitations on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligations except Contingent
Obligations in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders.
SECTION 9.3 Limitations on Liens. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties
(including shares of capital stock), real or personal, whether now owned or
hereafter acquired, except Permitted Liens.
SECTION 9.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture,
evidence of Debt or other obligation or security, substantially all or a
material portion of the business or assets of any other Person or any other
investment or interest whatsoever in any other Person; or make or permit to
exist, directly or indirectly, any loans, advances or extensions of credit to,
or any investment in cash or by delivery of property in, any Person; or enter
into, directly or indirectly, any commitment or option in respect of the
foregoing except:
(a) investments in Wholly-Owned Subsidiaries existing on the
Closing Date and the other existing loans, advances and investments described
on Schedule 9.4;
(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than 120 days from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or Moody's Investors Service, Inc., (iii) certificates of
deposit maturing no more than 120 days from the date of creation thereof issued
by commercial banks incorporated under the laws of the United States of
America, each having combined capital, surplus and undivided profits of not
less than $500,000,000 and having a rating of "A" or better by a nationally
recognized rating agency; provided, that the aggregate amount invested in such
certificates of deposit shall not at any time exceed $5,000,000 for any one
such certificate of deposit and $10,000,000 for any one such bank, or (iv) time
deposits maturing no more than 30 days from the date of creation thereof with
commercial banks or savings banks or savings and loan associations each having
membership either
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in the Federal Deposit Insurance Corporation ("FDIC") or the deposits of which
are insured by the FDIC and in amounts not exceeding the maximum amounts of
insurance thereunder;
(c) capital contributions to and investments in Wholly-owned
Subsidiaries created or acquired after the Closing Date; provided, that such
Wholly-Owned Subsidiaries become Borrowers hereunder pursuant to the
requirements of Section 7.12 hereof;
(d) loans and advances to employees for reasonable and necessary
business and travel expenses in the ordinary course of business of Maxim and
its Subsidiaries;
(e) deposits for utilities, security deposits, leases and similar
prepaid expenses incurred in the ordinary course of business;
(f) trade accounts created in the ordinary course of business;
(g) investments by Maxim or any Subsidiary in the form of
acquisitions of all or substantially all of the business or a line of business
(whether by the acquisition of capital stock, assets or any combination
thereof) of any other Person so long as (i) the acquisition is of a company,
business or property in the same line of business as Maxim or any Subsidiary of
Maxim, (ii) no Default or Event of Default is in existence at the time of such
acquisition or would be created as a consequence of such acquisition, (iii) on
a pro forma combined basis, assuming that the Person that is the target of the
acquisition had been acquired as of the first day of the four quarter fiscal
period ending at the immediately preceding fiscal quarter end, all financial
covenants and other terms and provisions of this Agreement would have been
complied with during the four fiscal quarters ending at the immediately
preceding fiscal quarter end, after giving pro forma effect to the acquisition
and (iv) the aggregate consideration paid by Maxim and its Subsidiaries for all
such acquisitions for any period of four (4) successive fiscal quarters does
not exceed the following amounts, determined by reference to the Debt to
EBITDAR Ratio, calculated as of the immediately preceding fiscal quarter end as
provided in Section 8.2, as follows:
<TABLE>
<CAPTION>
Debt to EBITDAR Ratio Permitted Amount
--------------------- ----------------
<S> <C>
Greater than or equal to 2.5 to 1.0 $5,000,000
Less than 2.5 to 1.0 but greater than $10,000,000
or equal to 1.5 to 1.0
Less than 1.5 to 1.0 $20,000,000
</TABLE>
; and
(h) such other investments by Maxim or any Subsidiary in the form
of acquisitions of all or substantially all of the business or a line of
business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person if approved by the Required Lenders,
in their sole and absolute discretion, in writing prior to such consummation.
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SECTION 9.5 Limitations on Mergers and Liquidation. Merge, consolidate
or enter into any similar combination with any other Person or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except
(a) any Wholly-Owned Subsidiary of Maxim may merge with Maxim or any other
Wholly-Owned Subsidiary of Maxim and (b) Maxim or any Wholly-Owned Subsidiary
may merge with or into any other Person for the purpose of consummating any
acquisition permitted by Section 9.4 as long as Maxim or such Wholly-Owned
Subsidiary is the surviving Person and no Default or Event of Default shall
have occurred before and after giving effect to such merger.
SECTION 9.6 Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, the sale of any receivables and
leasehold interests and any sale-leaseback or similar transaction), whether now
owned or hereafter acquired except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of Maxim or any of its Subsidiaries;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the compromise or
collection thereof;
(d) the transfer by any Subsidiary of any of its property to any
Borrower, or the transfer by Maxim of any of its intellectual property to any
Borrower; or
(e) the sale of assets with an aggregate value not to exceed
$1,000,000 in any year in connection with the closing and liquidation by Maxim
or its Subsidiaries of retail stores.
SECTION 9.7 Limitations on Dividends and Distributions. Declare or pay
any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares
of its capital stock; or make any material change in its capital structure that
could reasonably be expected to have a Material Adverse Effect; provided that
(a) Maxim or any Subsidiary may pay dividends in shares of its own capital
stock, (b) any Subsidiary of a Borrower may pay dividends or make other
distributions in respect of its capital stock to such Borrower, (c) any
Subsidiary of a Borrower may make payments on any Debt or other obligation owed
to such Borrower which Debt or other obligation is permitted hereunder and (d)
Maxim may purchase restricted securities (as defined in Rule 144(a)(3)
promulgated under the Securities Act of 1933, as amended) issued by Maxim in
connection with acquisitions consummated prior to the Closing Date or in
connection with acquisitions consummated in compliance with Section 9.4(g), in
an aggregate amount not to exceed $500,000 in any year.
SECTION 9.8 Transactions with Affiliates. Directly or indirectly: (a)
make any loan or advance to, or purchase or assume any note or other obligation
to or from, any of its officers, directors, shareholders or other Affiliates,
or to or from any member of the immediate family of any
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of its officers, directors, shareholders or other Affiliates, or subcontract
any operations to any of its Affiliates, or (b) enter into, or be a party to,
any transaction with any of its Affiliates, except pursuant to the reasonable
requirements of its business and upon fair and reasonable terms that are fully
disclosed to the Required Lenders and are no less favorable to it than it would
obtain in a comparable arm's length transaction with a Person not its
Affiliate.
SECTION 9.9 Certain Accounting Changes. Change its Fiscal Year end, or
make any material change in its accounting treatment and reporting practices
except as required by GAAP.
SECTION 9.10 Licenses. Terminate any Governmental Approval or any
Material Contract without the prior written consent of the Required Lenders if
in the reasonable opinion of the Required Lenders such termination would have a
Material Adverse Effect.
SECTION 9.11 Restrictive Agreements. Enter into (a) any agreement
providing for Debt of Maxim or its Subsidiaries which contains any negative
pledge on assets or any covenants materially more restrictive than the
provisions of Articles VII, VIII and IX hereof, or which restricts, limits or
otherwise encumbers its ability to incur Liens on or with respect to any of its
assets or properties other than the assets or properties securing such Debt or
(b) any agreement which shall restrict, limit or otherwise encumber (by
covenant or otherwise) the ability to make any payment to Maxim or any of its
Subsidiaries, in the form of dividends, intercompany advances or otherwise.
SECTION 9.12 Rebate Escrow Account. Permit any funds of Maxim or any
of its Subsidiaries to be deposited in the Rebate Escrow Account, other than
funds received which reflect rebate payments reserved for franchisees of Maxim.
ARTICLE X
DEFAULT AND REMEDIES
SECTION 10.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans. Any Borrower shall
default in any payment of principal of any Loan or Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Any Borrower shall default in the
payment when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on any Loan or Note or the payment of any other
Obligation.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by any Borrower or any of its Subsidiaries under this
Agreement, any Loan Document or any
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amendment hereto or thereto, shall at any time prove to have been incorrect or
misleading in any material respect when made or deemed made, except to the
extent that (i) an event or condition has occurred that would cause a
representation or warranty to be incorrect or misleading, (ii) the occurrence
of such event or condition and the representation or warranty to which it
relates has been previously disclosed in writing to the Administrative Agent
and the Lenders and (iii) the occurrence of such event or condition did not and
will not have, and is not reasonably expected to have, a Material Adverse
Effect with respect to Maxim or any of its Subsidiaries.
(d) Default in Performance of Certain Covenants. Any Borrower
shall default in the performance or observance of any covenant or agreement
contained in Sections 2.9, 6.1, 6.4, 7.1, 7.12 or 7.13 or Articles VIII or IX
of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. Any
Borrower or Subsidiary thereof shall default in the performance or observance
of any term, covenant, condition or agreement contained in this Agreement
(other than as specifically provided for otherwise in this Section 10.1) or any
other Loan Document and such default shall continue for a period of thirty (30)
days after written notice thereof has been given to such Borrower or Subsidiary
by the Administrative Agent.
(f) Hedging Agreement. Any termination payment shall be due by a
Borrower under any Hedging Agreement and such amount is not paid within five
(5) Business Days of the due date thereof.
(g) Debt Cross-Default. Maxim or any of its Subsidiaries shall (i)
default in the payment of any Debt in an amount exceeding $1,000,000 beyond the
period of grace, if any, provided in the instrument or agreement under which
such Debt was created; or (ii) default in the observance or performance of any
other agreement or condition relating to any Debt or contained in any
instrument or agreement evidencing, securing or relating thereto or any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such Debt
(or a trustee or agent on behalf of such holder or holders) to cause, with the
giving of notice if required, any such Debt to become due prior to its stated
maturity (any applicable grace period having expired).
(h) Other Cross-Defaults. Maxim or any of its Subsidiaries shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract the breach of which could
reasonably be expected to have a Material Adverse Effect unless, but only as
long as, the existence of any such default is being contested by Maxim or such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect thereof have been established on the books of Maxim or such Subsidiary
to the extent required by GAAP.
(i) Change in Control. A Change in Control shall occur.
(j) Voluntary Bankruptcy Proceeding. Maxim or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect); (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to
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bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts; (iii) consent to or fail to contest within sixty (60) days
of the filing thereof any petition filed against it in an involuntary case
under such bankruptcy laws or other laws; (iv) apply for or consent to, or fail
to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, or liquidator of
itself or of a substantial part of its property; (v) admit in writing its
inability to pay its debts as they become due; (vi) make a general assignment
for the benefit of creditors; or (vii) take any corporate action for the
purpose of authorizing any of the foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against Maxim or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for Maxim or any Subsidiary thereof or for all or any substantial part
of their respective assets, and such case or proceeding shall continue
undismissed or unstayed for a period of sixty (60) consecutive calendar days,
or an order granting the relief requested in such case or proceeding
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
(l) Failure of Agreements. Any material provision of any other
Loan Document shall for any reason cease to be valid and binding on any
Borrower or Subsidiary thereof party thereto or any such Person shall so state
in writing or the Loan Documents shall for any reason cease to create a valid
and perfected first priority Lien on, or security interest in, any of the
Collateral purported to be covered thereby, in each case other than in
accordance with the express terms hereof or thereof.
(m) Termination Event. The occurrence of any of the following
events: (i) any Borrower or any ERISA Affiliate fails to make full payment when
due of all amounts which, under the provisions of any Pension Plan or Section
412 of the Code, such Borrower or ERISA Affiliate is required to pay as
contributions thereto; (ii) an accumulated funding deficiency in excess of
$250,000 occurs or exists, whether or not waived, with respect to any Pension
Plan; (iii) a Termination Event; or (iv) any Borrower or any ERISA Affiliate as
employers under one or more Multiemployer Plan makes a complete or partial
withdrawal from any such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an amount exceeding
$250,000.
(n) Judgment. A judgment or order for the payment of money which
exceeds in amount the Material Judgment Amount shall be entered against Maxim
or any of its Subsidiaries by any court and such judgment or order shall
continue undischarged or unstayed for a period of thirty (30) days.
(o) Attachment. A warrant or writ of attachment or execution or
similar process shall be issued against any property of Maxim or any Subsidiary
thereof which exceeds in value the Material Judgment Amount and such warrant or
process shall continue undischarged or unstayed for a period of thirty (30)
days.
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SECTION 10.2 Remedies. Upon the occurrence of an Event of Default and
at any time thereafter unless and until such Event of Default has been waived
by the Required Lenders, the Administrative Agent shall, upon the request and
direction of the Required Lenders, by notice to the Borrowers:
(a) Acceleration: Termination of Facilities. Declare the
principal of and interest on the Loans and the Notes at the time outstanding,
and all other amounts owed to the Lenders and to the Administrative Agent under
this Agreement or any of the other Loan Documents and all other Obligations, to
be forthwith due and payable, whereupon the same shall immediately become due
and payable without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Agreement or the other Loan
Documents to the contrary notwithstanding, and terminate the Credit Facilities
and the Commitments and any right of the Borrowers to request borrowings
thereunder; provided, that upon the occurrence of an Event of Default specified
in Section 10.1(j) or (k), the Credit Facilities and the Commitments shall be
automatically terminated and all Obligations shall automatically become due and
payable.
(b) Rights of Collection. Exercise on behalf of the Lenders all of
their other rights and remedies under this Agreement, the other Loan Documents
and Applicable Law, in order to satisfy all of the Borrowers' Obligations.
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy
given hereunder or under the Loan Documents or that may now or hereafter exist
in law or in equity or by suit or otherwise. No delay or failure to take action
on the part of the Administrative Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude other or
further exercise thereof or the exercise of any other right, power or privilege
or shall be construed to be a waiver of any Event of Default. No course of
dealing between the Borrowers, the Administrative Agent and the Lenders or
their respective agents or employees shall be effective to change, modify or
discharge any provision of this Agreement or any of the other Loan Documents or
to constitute a waiver of any Event of Default.
SECTION 10.4 Set-off. Except to the extent prohibited by law, in
addition to any rights now or hereafter granted under Applicable Law and not by
way of limitation of any such rights, upon and after the occurrence of any
Event of Default and during the continuance thereof, the Lenders and any
assignee or participant of a Lender in accordance with Section 12.9 are hereby
authorized by the Borrowers at any time or from time to time, without notice to
the Borrowers or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits
(general or special, time or demand, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or
unmatured, excluding government securities required by Applicable Law to be
held as security for worker's compensation and similar claims and excluding
amounts on deposit in the Rebate Escrow Account) and any other
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indebtedness at any time held or owing by the Lenders, or any such assignee or
participant to or for the credit or the account of the Borrowers against and on
account of the obligations irrespective of whether or not (a) the Lenders shall
have made any demand under this Agreement or any of the other Loan Documents or
(b) the Administrative Agent shall have declared any or all of the Obligations
to be due and payable as permitted by Section 10.2.
SECTION 10.5 Adjustments. If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or if any Lender shall at any time receive any Collateral in respect
to its Loans (whether voluntarily or involuntarily, by set-off or otherwise) in
a greater proportion than any such payment to and Collateral received by any
other Lender, if any, in respect of such other Lender's Loans, or interest
thereon, such Benefitted Lender shall, to the extent permitted by Applicable
Law, purchase for cash from the other Lenders such portion of each such other
Lender's Loans, or shall provide such other Lenders with the benefits of any
such Collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of the Lenders; provided, that if all or any portion
of such excess payment or benefits is thereafter recovered from such Benefitted
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned to the extent of such recovery, but without interest. The Borrowers
agree that each Lender so purchasing a portion of another Lender's Loans may
exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender were the
direct holder of such portion.
SECTION 10.6 Consents. The Borrowers acknowledge that certain
transactions contemplated by this Agreement and the other Loan Documents and
certain actions which may be taken by the Administrative Agent or the Lenders
in the exercise of their respective rights under this Agreement and the other
Loan Documents may require the consent of a Governmental Authority. If counsel
to the Administrative Agent reasonably determines that the consent of a
Governmental Authority is required in connection with the execution, delivery
and performance of any of the aforesaid documents or any documents delivered to
the Administrative Agent or the Lenders in connection therewith or as a result
of any action which may be taken pursuant thereto, then the Borrowers, at their
sole cost and expense, agree to use their best efforts to secure such consent
and to cooperate with the Administrative Agent and the Lenders in any action
commenced by the Administrative Agent or any Lender to secure such consent.
ARTICLE XI
THE ADMINISTRATIVE AGENT
SECTION 11.1 Appointment. Each Lender hereby irrevocably appoints and
authorizes First Union to act as Administrative Agent hereunder and under the
other Loan Documents and to take such actions as agent on its behalf hereunder
and under the other Loan Documents, and to exercise such powers and to perform
such duties, as are specifically delegated to the Administrative Agent by the
terms hereof or thereof, together with such other powers and duties as are
reasonably incidental thereto.
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SECTION 11.2 Nature of Duties. The Administrative Agent shall have no
duties or responsibilities other than those expressly set forth in this
Agreement and the other Loan Documents. The Administrative Agent shall not
have, by reason of this Agreement or any other Loan Document, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any
other Loan Document, express or implied, is intended to or shall be so
construed as to impose upon the Administrative Agent any obligations or
liabilities in respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents or attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact that it selects with reasonable
care. The Administrative Agent shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Loan Documents and its
duties hereunder and thereunder and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts. The Lenders hereby acknowledge that the
Administrative Agent shall not be under any duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Loan Document unless it shall be requested in writing to do so by
the Required Lenders (or, where a higher percentage of the Lenders is expressly
required hereunder, such Lenders).
SECTION 11.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action taken or omitted to be taken by
it or such Person under or in connection with the Loan Documents, except for
its or such Person's own gross negligence or willful misconduct, (ii)
responsible in any manner to any Lender for any recitals, statements,
information, representations or warranties herein or in any other Loan Document
or in any document, instrument, certificate, report or other writing delivered
in connection herewith or therewith, for the execution, effectiveness,
genuineness, validity, enforceability or sufficiency of this Agreement or any
other Loan Document, or for the financial condition of Borrowers or any of
their Subsidiaries or any other Person, or (iii) required to ascertain or make
any inquiry concerning the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Loan Document or the
existence or possible existence of any Default or Event of Default, or to
inspect the properties, books or records of the Borrowers or any of their
Subsidiaries.
SECTION 11.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any notice, statement, consent or other communication (including, without
limitation, any thereof by telephone, telecopy, telex, telegram or cable)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons. The Administrative Agent may deem
and treat each Lender as the owner of its interest hereunder for all purposes
hereof unless and until a written notice of the assignment, negotiation or
transfer thereof shall have been given to the Administrative Agent in
accordance with the provisions of this Agreement. The Administrative Agent
shall be entitled to refrain from taking or omitting to take any action in
connection with this Agreement or any other Loan Document (i) if such action or
omission would, in the reasonable opinion of the Administrative Agent, violate
any applicable law or any provision of this Agreement or any other Loan
Document or (ii) unless and until it shall have received such advice or
concurrence of the Required Lenders (or,
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where a higher percentage of the Lenders is expressly required hereunder, such
Lenders) as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent's acting or refraining from acting hereunder
or under any other Loan Document in accordance with the instructions of the
Required Lenders (or, where a higher percentage of the Lenders is expressly
required hereunder, such Lenders), and such instructions and any action taken
or failure to act pursuant thereto shall be binding upon all of the Lenders
(including all subsequent Lenders).
SECTION 11.5 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representation or warranty to it and that no act by the
Administrative Agent or any such Person hereafter taken, including any review
of the affairs of Maxim and its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that (i) it has, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
properties, financial and other condition and creditworthiness of Maxim and its
Subsidiaries and made its own decision to enter into this Agreement and extend
credit to the Borrowers hereunder, and (ii) it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action hereunder and under the other Loan Documents and to make such
investigation as it deems necessary to inform itself as to the business,
prospects, operations, properties, financial and other condition and
creditworthiness of Maxim and its Subsidiaries. Except as expressly provided in
this Agreement and the other Loan Documents, the Administrative Agent shall
have no duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information concerning the
business, prospects, operations, properties, financial or other condition or
creditworthiness of Maxim or its Subsidiaries or any other Person that may at
any time come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in- fact or Affiliates.
SECTION 11.6 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent shall have received written notice from
Borrowers or a Lender referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default." In the
event that the Administrative Agent receives such a notice, the Administrative
Agent will give notice thereof to the Lenders as soon as reasonably
practicable; provided, however, that if any such notice has also been furnished
to the Lenders, the Administrative Agent shall have no obligation to notify the
Lenders with respect thereto. The Administrative Agent shall (subject to
Sections 11.4 and 12.10) take such action with respect to such Default or Event
of Default as shall reasonably be directed by the Required Lenders; provided
that, unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
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such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable in the best interests of the
Lenders.
SECTION 11.7 Indemnification. To the extent the Administrative Agent
is not reimbursed by or on behalf of Borrowers, and without limiting the joint
and several obligations of Borrowers to do so, the Lenders (i) shall and do
hereby indemnify the Administrative Agent and its officers, directors,
employees, agents, attorneys-in-fact and Affiliates, ratably in proportion to
their respective percentages as used in determining the Required Lenders as of
the date of determination, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the repayment in full of the Loans and the termination of
the Commitments) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any documents contemplated by or referred to herein
or the transactions contemplated hereby or thereby or any action taken or
omitted by the Administrative Agent under or in connection with any of the
foregoing, and (ii) shall reimburse the Administrative Agent upon demand,
ratably in proportion to their respective percentages as used in determining
the Required Lenders as of the date of determination, for any expenses incurred
by the Administrative Agent in connection with the preparation, negotiation,
execution, delivery, administration, amendment, modification, waiver or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the other Loan Documents (including, without limitation, reasonable
attorneys' fees and expenses and compensation of agents and employees paid for
services rendered on behalf of the Lenders); provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the gross negligence or willful misconduct of the
party to be indemnified.
SECTION 11.8 The Administrative Agent in its Individual Capacity. With
respect to its Commitment, the Loans made by it and the Note or Notes issued to
it, the Administrative Agent in its individual capacity and not as
Administrative Agent shall have the same rights and powers under the Loan
Documents as any other Lender and may exercise the same as though it were not
performing the agency duties specified herein; and the terms "Lenders,"
"Required Lenders," "holders of Notes" and any similar terms shall, unless the
context clearly otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking,
trust, financial advisory or other business with the Borrowers, any of their
Subsidiaries or any of their respective Affiliates as if the Administrative
Agent were not performing the agency duties specified herein, and may accept
fees and other consideration from any of them for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
SECTION 11.9 Successor Administrative Agent. The Administrative Agent
may resign at any time by giving thirty (30) days' prior written notice to the
Borrowers and the Lenders. Upon any such notice of resignation, the Required
Lenders will, with the prior written consent of the Borrowers (which consent
shall not be unreasonably withheld), appoint from among the Lenders a
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successor to the Administrative Agent (provided that the Borrowers' consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing). If no successor to the Administrative Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within such thirty-day period, then the retiring Administrative
Agent may, on behalf of the Lenders and after consulting with the Lenders and
the Borrowers, appoint a successor Administrative Agent from among the Lenders.
Upon the acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent. If no successor to the Administrative Agent has accepted
appointment as Administrative Agent by the thirtieth (30th) day following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall thereafter perform all of the duties of the
Administrative Agent hereunder and under the other Loan Documents until such
time, if any, as the Required Lenders appoint a successor Administrative Agent
as provided for hereinabove.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to
be received by a party hereto (i) on the date of delivery if delivered by hand
or sent by telecopy, (ii) on the next Business Day if sent by recognized
overnight courier service and (iii) on the third Business Day following the
date sent by certified mail, return receipt requested. A telephonic notice to
any Agent as understood by such Agent will be deemed to be the controlling and
proper notice in the event of a discrepancy with or failure to receive a
confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to
it at the following addresses, or any other address as to which all the other
parties are notified in writing.
If to any Borrower: The Maxim Group, Inc.
210 TownPark Drive
Kennesaw, Georgia 30144
Attention: Thomas P. Leahey,
Executive Vice President/Finance
Telephone No.: (770) 590-9369
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Telecopy No.: (770) 590-7709
If to First Union,
as Administrative Agent: First Union National Bank of
Georgia
12th Floor
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Michael S. Murphey
Telephone No.: (404) 225-4258
Telecopy No.: (404) 225-4255
and
First Union National Bank of North
Carolina 301 South College
Street, TW-10 Charlotte,
North Carolina 28288-0608
Attention: Syndication Agency
Services Telephone No.: (704)
704/383-0281 Telecopy No.:
(704) 704/383-0288
If to any Lender: The Address set forth on Schedule 1.1
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office at One First Union Center, TW-10, Charlotte, North
Carolina 28288-0608, or any subsequent office which shall have been specified
for such purpose by written notice to the Borrowers and Lenders, as the
Administrative Agent's office referred to herein, to which payments due are to
be made and at which Loans will be disbursed.
SECTION 12.2 Expenses. The Borrowers will pay all out-of-pocket
expenses of the Administrative Agent in connection with: (a) the preparation,
execution and delivery of this Agreement and each of the other Loan Documents,
whenever the same shall be executed and delivered, including all syndication
and due diligence expenses, appraiser's fees, search fees, recording fees,
taxes and reasonable fees and disbursements of counsel for the Administrative
Agent; (b) the preparation, execution and delivery of any waiver, amendment or
consent by the Administrative Agent or the Lenders relating to this Agreement
or any of the other Loan Documents including reasonable fees and disbursements
of counsel for the Administrative Agent, search fees, appraiser's fees,
recording fees and taxes imposed in connection therewith; and (c) consulting
with one or more Persons, including appraisers, accountants, engineers and
attorneys, concerning or
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related to the nature, scope or value of any right or remedy of the
Administrative Agent or any of the Lenders hereunder or under any of the other
Loan Documents, including any review of factual matters in connection
therewith, which expenses shall include the reasonable fees and disbursements
of such Persons. In addition, the Borrowers will pay all out-of-pocket expenses
of the Administrative Agent and each Lender in connection with prosecuting or
defending any claim in any way arising out of, related to, connected with, or
enforcing any provision of, this Agreement or any of the other Loan Documents,
which expenses shall include the reasonable fees and disbursements of counsel
and of experts and other consultants retained by the Administrative Agent or
any of the Lenders.
SECTION 12.3 Governing Law. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance with the laws of the State of Georgia,
without reference to the conflicts or choice of law principles thereof.
SECTION 12.4 Consent to Jurisdiction. The Borrowers hereby irrevocably
consent to the personal jurisdiction of the state and federal courts located in
Cobb County and Fulton County, Georgia, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement, the
Notes and the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. The Borrowers
hereby irrevocably consent to the service of a summons and compliant and other
process in any action, claim or proceeding brought by any Agent or Lender in
connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such
rights and obligations, on behalf of itself or its property, in the manner
specified in Section 12.1. Nothing in this Section 12.4 shall affect the right
of the Administrative Agent or any Lender to serve legal process in any other
manner permitted by Applicable Law or to bring any action or proceeding against
any Borrower or its properties in the courts of any other jurisdictions.
SECTION 12.5 Arbitration.
(a) Binding Arbitration. Upon demand of any party, whether made
before or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any
other Loan Documents ("Disputes"), between or among parties to the Notes or any
other Loan Document shall be resolved by binding arbitration as provided
herein. Institution of a judicial proceeding by a party does not waive the
right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class
actions, claims arising from Loan Documents executed in the future, or claims
concerning any aspect of the past, present or future relationships arising out
of or connected with the Loan Documents. Arbitration shall be conducted under
and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and
Title 9 of the U.S. Code. All arbitration hearings shall be conducted in
Atlanta, Georgia. The expedited procedures set forth in Rule 51, et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single
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arbitrator selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state where the
hearing will be conducted. The arbitrators shall be appointed as provided in
the Arbitration Rules.
(b) Preservation of Certain Remedies. Notwithstanding the
preceding binding arbitration provisions, the Administrative Agent and the
Lenders preserve, without diminution, certain remedies that the Administrative
Agent and the Lenders may employ or exercise freely, either alone, in
conjunction with or during a Dispute. The Administrative Agent and the Lenders
shall have and hereby reserve the right to proceed in any court of proper
jurisdiction or by self help to exercise or prosecute the following remedies:
(i) all rights to foreclose against any real or personal property or other
security by exercising a power of sale granted in the Loan Documents or under
applicable law or by judicial foreclosure and sale, (ii) all rights of self
help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) when applicable, a judgement by
confession of judgement and (iv) obtaining provisional or ancillary remedies
including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and in filing an involuntary bankruptcy proceeding.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
SECTION 12.6 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER HEREBY
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
SECTION 12.7 Reversal of Payment. To the extent any Borrower makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
Collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and
effect as if such payment or proceeds had not been received by the
Administrative Agent.
SECTION 12.8 Injunctive Relief. The Borrowers recognize that, in the
event the Borrowers fail to perform, observe or discharge any of their
obligations or liabilities under this Agreement, any remedy of law may prove to
be inadequate relief to the Lenders. Therefore, the Borrowers agree that the
Lenders, at the Lenders' option, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
SECTION 12.9 Successors and Assigns; Participations.
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(a) Assignment by Lenders. Each Lender may assign to one or more
other Eligible Assignees (each, an "Assignee") all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the outstanding Loans made by it and the Note or
Notes held by it), and such assignment may be allocated among the assigning
Lender's Term A Loans, Term B Loans and Revolver Loans and the related
Commitment of the assigning Lender on other than a pro-rata basis; provided,
however, that (i) any such assignment (other than an assignment to a Lender or
an Affiliate of a Lender) shall not be made without the prior written consent
of the Administrative Agent and the Borrowers (to be evidenced by their
counterexecution of the relevant Assignment and Acceptance), which consent
shall not be unreasonably withheld, (ii) except in the case of an assignment to
a Lender or an Affiliate of a Lender, the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to each such
assignment) shall in no event be less than the lesser of (y) the entire
Commitment of such Lender immediately prior to such assignment or (z)
$5,000,000, and (iii) the parties to each such assignment will execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance (an "Assignment and Acceptance") in the
form of Exhibit E attached hereto, together with any Note or Notes subject to
such assignment, and will pay a nonrefundable processing fee of $2,500 to the
Administrative Agent for its own account. Upon such execution, delivery,
acceptance and recording of the Assignment and Acceptance, from and after the
effective date specified therein, which effective date shall be at least five
Business Days after the execution thereof (unless the Administrative Agent
shall otherwise agree), (A) the Assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of the assigning Lender hereunder with respect thereto and (B) the
assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (other than rights under the provisions of this Agreement and the
other Loan Documents relating to indemnification or payment of fees, costs and
expenses, to the extent such rights relate to the time prior to the effective
date of such Assignment and Acceptance) and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of such assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto). The terms
and provisions of each Assignment and Acceptance shall, upon the effectiveness
thereof, be incorporated into and made a part of this Agreement, and the
covenants, agreements and obligations of each Lender set forth therein shall be
deemed made to and for the benefit of the Administrative Agent and the other
parties hereto as if set forth at length herein.
(b) Maintenance of the Register. The Administrative Agent will
maintain at its address for notices referred to herein a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for
the recordation of the names and addresses of the Lenders and the Commitments
of, and principal amount of the Loans owing to, each Lender from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrowers, the Administrative
Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Borrowers and each Lender at any
reasonable time and from time to time upon reasonable prior notice.
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(c) Acceptance of Assignment; Replacement Notes. Upon its receipt
of a duly completed Assignment and Acceptance executed by an assigning Lender
and an Assignee and counterexecuted by the Borrowers (if required), together
with any Note or Notes subject to such assignment and the processing fee
referred to in subsection (a) above, the Administrative Agent will (i) accept
such Assignment and Acceptance, (ii) on the effective date thereof, record the
information contained therein in the Register and (iii) give notice thereof to
the Borrowers and the Lenders. Within five (5) Business Days after its receipt
of such notice, the Borrowers, at their own expense, will execute and deliver
to the Administrative Agent in exchange for the surrendered Note or Notes a new
Note or Notes to the order of such Assignee in an aggregate principal amount
equal to the principal amount of the Commitment (or, if the Commitments have
been terminated, the principal amount of the Loans) assumed by it pursuant to
such Assignment and Acceptance and, to the extent the assigning Lender has
retained its Loans and/or Commitment hereunder, a new Note or Notes to the
order of the assigning Lender in an aggregate principal amount equal to the
principal amount of the Commitment (or, if the Commitments have been
terminated, the principal amount of the Loans) retained by it hereunder. Such
new Note or Notes shall be dated the date of the replaced Note or Notes and
shall otherwise be in substantially the forms of the Notes attached hereto as
Exhibits A-1, A-2 and A-3. The Administrative Agent will return canceled Notes
to the Borrowers.
(d) Participations. Each Lender may, without the consent of the
Borrowers, the Administrative Agent or any other Lender, sell to one or more
other Persons (each, a "Participant") participations in any portion comprising
less than all of its rights and obligations under this Agreement (including,
without limitation, a portion of its Commitment, the outstanding Loans made by
it and the Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged and such Lender shall
remain solely responsible for the performance of such obligations, (ii) any
such participation shall be in an amount of not less than $5,000,000, but no
Lender shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement, (iii) the Borrowers, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, and no Lender shall permit any Participant to have any voting rights
or any right to control the vote of such Lender with respect to any amendment,
modification, waiver, consent or other action hereunder or under any other Loan
Document (except as to actions that would (w) reduce or forgive the principal
amount of, or rate of interest on, any Loan, or reduce or forgive any fees or
other Obligations, (x) extend any date (including without limitation, the
Revolver Facility Termination Date or the dates of the Scheduled Term A
Installments or the Scheduled Term B Installments) fixed for the payment of any
principal of or interest on any Loan, any fees or any other Obligations, (y)
release Collateral securing the Obligations (other than (1) upon termination of
the Commitments and payment and satisfaction of all Obligations, (2) Collateral
constituting property being sold or disposed of if Borrowers certify to the
Administrative Agent that the sale or disposition is made in compliance with
the provisions of this Agreement and the Security Documents, upon which
certification the Administrative Agent may conclusively rely in good faith,
without further inquiry, or (3) otherwise in accordance with the terms of this
Agreement and the Security Documents), or (z) increase any Commitment of any
Lender), and (iv) no Participant shall have any rights under this Agreement or
any of the other Loan Documents, each Participant's rights against the granting
Lender in respect of any participation to be those set forth in the
participation
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agreement, and all amounts payable by the Borrowers hereunder shall be
determined as if such Lender had not granted such participation.
(e) Other Assignments. Nothing in this Agreement shall be
construed to prohibit any Lender from pledging or assigning all or any portion
of its rights and interest hereunder or under any Note to any Federal Reserve
Bank as security for borrowings therefrom; provided, however, that no such
pledge or assignment shall release a Lender from any of its obligations
hereunder.
(f) Disclosure of Information; Confidentiality. The Administrative
Agent and the Lenders shall treat as confidential all non-public information,
including, without limitation, all financial projections, obtained pursuant to
the Loan Documents and shall disclose such information outside their
organizations only as may be deemed appropriate by any of the Administrative
Agent or the Lenders in the exercise of its or their rights under the Loan
Documents or as compelled by judicial or administrative process or by other
requirements of Applicable Law. The Administrative Agent and any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 12.9, disclose to the assignee,
participant, proposed assignee or proposed participant, any information
relating to the Borrowers furnished to the Administrative Agent or such Lender.
SECTION 12.10 Amendments, Waivers and Consents: Renewal. Except as set
forth below, any term, covenant, agreement or condition of this Agreement or
any of the other Loan Documents may be amended or waived by the Lenders, and
any consent given by the Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders (or by the Administrative
Agent with the consent of the Required Lenders) and delivered to the
Administrative Agent and, in the case of an amendment, signed by the Borrowers;
provided, that no amendment, waiver or consent shall (a) increase the amount or
extend the time of the obligation of the Lenders to make Loans, (b) extend the
originally scheduled time or times of payment of the principal of any Loan or
the time or times of payment of interest on any Loan, (c) reduce the rate of
interest or fees payable on any Loan, (d) permit any subordination of the
principal or interest on any Loan, (e) release any Collateral or Security
Document (other than (i) upon termination of the Commitments and payment and
satisfaction of all Obligations, (ii) Collateral constituting property being
sold or disposed of if Borrowers certify to the Administrative Agent that the
sale or disposition is made in compliance with the provisions of this Agreement
and the Security Documents, upon which certification the Administrative Agent
may conclusively rely in good faith, without further inquiry, or (iii) as
specifically permitted in this Agreement or the applicable Security Document)
or (f) amend the provisions of this Section 12.10 or the definition of Required
Lenders, without the prior written consent of each Lender. In addition, no
amendment, waiver or consent to the provisions of Article XI shall be made
without the written consent of the Administrative Agent.
SECTION 12.11 Performance of Duties. The Borrowers' obligations under
this Agreement and each of the Loan Documents shall be performed at the joint
and several sole cost and expense of the Borrowers.
SECTION 12.12 Indemnification. The Borrowers agree to reimburse the
Administrative Agent and the Lenders for all reasonable costs and expenses,
including reasonable counsel,
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<PAGE> 86
appraisal, or other expert or consultant fees and disbursements incurred, and
the Borrowers hereby indemnify and hold the Administrative Agent and the
Lenders harmless from and against all losses suffered by the Administrative
Agent and the Lenders in connection with (a) the exercise by the Administrative
Agent or the Lenders of any right or remedy granted to them under this
Agreement or any of the other Loan Documents, (b) any claim, and the
prosecution or defense thereof, arising out of or in any way connected with
this Agreement or any of the other Loan Documents and (c) the collection or
enforcement of the Obligations or any of them; provided, that the indemnity
contained herein shall not apply to the extent that such losses, claims,
damages, liabilities or other expenses result from the gross negligence or
willful misconduct of such indemnified person.
SECTION 12.13 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or such Lenders pursuant to
any provisions of this Agreement or any of the other Loan Documents shall be
deemed coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facilities have not been
terminated.
SECTION 12.14 Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before.
SECTION 12.15 Provision of Loan Documents. Upon request by Maxim, the
Administrative Agent shall use its best efforts to provide to Maxim, or to
cause to be provided to Maxim, a copy of the final forms of this Agreement and
the other Loan Documents on a diskette or other machine readable format.
SECTION 12.16 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
SECTION 12.17 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 12.18 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.
SECTION 12.19 Maxim as Agent for Other Borrowers. Each Borrower hereby
irrevocably appoints and authorizes Maxim (a) to provide the Administrative
Agent with all notices with respect
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<PAGE> 87
to Loans for the benefit of any other Borrower and all other notices and
instructions under this Agreement and (b) to take, on behalf of Borrowers, all
actions, including, without limitation, the provision of consents, as are
required or permitted to be taken by any or all of the Borrowers pursuant to
this Agreement.
SECTION 12.20 Term of Agreement. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have been indefeasibly and irrevocably paid and satisfied in full and the
Commitments have been terminated. No termination of this Agreement shall affect
the rights and obligations of the parties hereto arising prior to such
termination.
-82-
<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, all as of the day and year first
written above.
[CORPORATE SEAL] THE MAXIM GROUP, INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title: Executive Vice President, Finance
----------------------------------
[CORPORATE SEAL] IMAGE INDUSTRIES, INC.
By: /s/ H. Stanley Padgett
-----------------------------------------
Name: H. Stanley Padgett
-----------------------------------
Title: President
----------------------------------
[CORPORATE SEAL] KINNAIRD & FRANCKE INTERIORS, INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title:Vice President
----------------------------------
[CORPORATE SEAL] KINNAIRD & FRANCKE DRAPERY CO., INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title: Vice President
----------------------------------
[CORPORATE SEAL] FIRST QUALITY, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Vice President
------------------------
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<PAGE> 89
[CORPORATE SEAL] STEVE PETERSON INTERIORS &
ASSOCIATES, INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title: Vice President
----------------------------------
[CORPORATE SEAL] BAY AREA CARPETS, INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title: Treasurer
----------------------------------
[CORPORATE SEAL] CARPET WORLD, INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title: Treasurer
----------------------------------
[CORPORATE SEAL] RNA ENTERPRISES, INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title: Treasurer
----------------------------------
[CORPORATE SEAL] GCO, INC.
By: /s/ Thomas P. Leahey
-----------------------------------------
Name: Thomas P. Leahey
-----------------------------------
Title: Treasurer
----------------------------------
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<PAGE> 90
[CORPORATE SEAL] DUBOSE CARPETS & FLOORS, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Treasurer
------------------------
[CORPORATE SEAL] RUGS N REMNANTS, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Vice President/Treasurer
------------------------
[CORPORATE SEAL] CARPET GALLERY, INC. (GEORGIA)
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Treasurer
------------------------
[CORPORATE SEAL] LOSANTVILLE CARPET OUTLET, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Treasurer
------------------------
[CORPORATE SEAL] AMERICAN CARPETS & INTERIORS, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Treasurer
------------------------
-85-
<PAGE> 91
[CORPORATE SEAL] INVESTOR MANAGEMENT, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Vice President
------------------------
[CORPORATE SEAL] GCO CARPET OUTLET, INC.
By: /s/ Gene Harper
-------------------------------
Name: Gene Harper
-------------------------
Title: Secretary
------------------------
[CORPORATE SEAL] MAXIM RETAIL GROUP, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Treasurer
------------------------
[CORPORATE SEAL] FIRST QUALITY OF NORTH CAROLINA, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Treasurer
------------------------
[CORPORATE SEAL] CARPET COUNTRY, INC.
By: /s/ Thomas P. Leahey
-------------------------------
Name: Thomas P. Leahey
-------------------------
Title: Vice President/Treasurer
------------------------
-86-
<PAGE> 92
CARPETMAX, L.P.
By: The Maxim Group, Inc., as its sole
general partner
By: /s/ Thomas P. Leahey
--------------------------------------
Title: Executive Vice President, Finance
-----------------------------------
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK OF
GEORGIA, as Administrative Agent and
Lender
By: /s/ Mayla M. Thom
-------------------------------------------
Name: Mayla M. Thom
--------------------------------------
Title: Vice President
------------------------------------
-87-
<PAGE> 93
SCHEDULE 1.1: LENDERS AND COMMITMENTS
-------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Revolver Loan Term A Term B
Lender Revolver Commitment Term A Commitment Term B Commitment
Commitment Percentage Commitment Percentage Commitment Percentage
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Union $65,000,000 100% $30,000,000 100% $30,000,000 100%
National Bank of
Georgia
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
Exhibit No. 11
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Computation of Primary and Fully Diluted Earnings Per
Common and Common Equivalent Share
<TABLE>
<CAPTION>
Three Months Ended
July 31, June 30,
----------------------
1996 1995
---- ----
<S> <C> <C>
Primary
Net (loss) earnings applicable to common
and common equivalent shares
$ (92,373) $ 918,990
---------- ----------
Shares:
Weighted average number of common
shares outstanding 7,169,058 7,060,528
Shares issuable from assumed exercise
of options and warrants - 241,885
---------- ----------
Weighted average number of common shares and
common share equivalents assuming average
market price for period 7,169,058 7,302,413
---------- ----------
Primary (loss) earnings per common and common
equivalent share $ (.01) $ .13
========== ==========
Fully Diluted
Net (loss) earnings applicable to common
and common equivalent shares $ (92,373) $ 918,990
---------- ----------
Shares:
Weighted average number of common
shares outstanding 7,169,058 7,060,528
Shares issuable from assumed exercise
of options and warrants - 241,885
---------- ----------
Weighted average number of common shares and
common share equivalents at higher of ending
or average market price for period 7,169,058 7,302,413
---------- ----------
Fully diluted (loss) earnings per common and common
equivalent share $ (.01) $ .13
========== ==========
</TABLE>
Common equivalent shares represent stock options granted to key employees and
directors, and redeemable common stock purchase warrants.
<PAGE> 2
Exhibit No. 11
THE MAXIM GROUP, INC. AND SUBSIDIARIES
Computation of Primary and Fully Diluted Earnings Per
Common and Common Equivalent Share
<TABLE>
<CAPTION>
Six Months Ended
July 31, June 30,
-------------------------
1996 1995
---- ----
<S> <C> <C>
Primary
Net earnings applicable to common
and common equivalent shares
$ 914,393 $ 1,142,684
------------ -----------
Shares:
Weighted average number of common
shares outstanding 7,135,615 7,055,705
Shares issuable from assumed exercise
of options and warrants 341,667 280,818
------------ -----------
Weighted average number of common shares and
common share equivalents assuming average
market price for period 7,477,282 7,336,523
------------ -----------
Primary earnings per common and common
equivalent share $ .12 $ .16
============= ===========
Fully Diluted
Net earnings applicable to common
and common equivalent shares $ 914,393 $ 1,142,684
------------ -----------
Shares:
Weighted average number of common
shares outstanding 7,135,615 7,055,705
Shares issuable from assumed exercise
of options and warrants 348,078 280,818
------------ -----------
Weighted average number of common shares and
common share equivalents at higher of ending
or average market price for period 7,483,693 7,336,523
------------ -----------
Fully diluted earnings per common and common
equivalent share $ .12 $ .16
============ ===========
</TABLE>
Common equivalent shares represent stock options granted to key employees and
directors, and redeemable common stock purchase warrants.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF THE MAXIM GROUP, INC. AND SUBSIDIARIES AS OF JULY
31, 1996 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR
THE QUARTER ENDED JULY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 3,258,157
<SECURITIES> 0
<RECEIVABLES> 20,867,646
<ALLOWANCES> 1,793,010
<INVENTORY> 15,819,278
<CURRENT-ASSETS> 42,187,408
<PP&E> 22,447,734
<DEPRECIATION> 4,484,683
<TOTAL-ASSETS> 73,078,022
<CURRENT-LIABILITIES> 22,287,214
<BONDS> 27,914,168
0
0
<COMMON> 7,234
<OTHER-SE> 21,125,422
<TOTAL-LIABILITY-AND-EQUITY> 73,078,022
<SALES> 70,092,235
<TOTAL-REVENUES> 70,092,235
<CGS> 43,128,899
<TOTAL-COSTS> 24,876,128
<OTHER-EXPENSES> 373,956
<LOSS-PROVISION> 250,000
<INTEREST-EXPENSE> 1,247,778
<INCOME-PRETAX> 1,523,988
<INCOME-TAX> 609,595
<INCOME-CONTINUING> 914,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 914,393
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
