<PAGE> 1
As filed with the Securities and Exchange Commission on January 13, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE MAXIM GROUP, INC.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-2060334
--------------------------------- --------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
210 TownPark Drive, Kennesaw, Georgia 30144
----------------------------------------------------------------------
(Address of Principal Executive Offices) ( Zip Code)
RSO PLAN
--------
(Full Title of the Plan)
A.J. NASSAR
President and Chief Executive Officer
210 TownPark Drive
Kennesaw, Georgia 30144
(770) 590-9369
--------------
(Name, address, telephone number, including
area code, of agent for service)
----------------------
Copies Requested to:
Robert T. Molinet, Esq.
Smith, Gambrell & Russell, LLP
3343 Peachtree Road, N.E.
Suite 1800, East Tower
Atlanta, Georgia 30326-1010
(404) 264-2620
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered Share(1) Price(1) Registration Fee
---------------- ---------- -------- -------- ----------------
Options and Shares of
<S> <C> <C> <C> <C>
$.001 par value 932,615 $16.69 $15,565,344 $4,717
Common Stock Shares
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the high and low reported
prices of the Common Stock on the Nasdaq National Market System on January 6,
1997.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are hereby incorporated by reference into
this Registration Statement, and all documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities and Exchange
Act of 1934, prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing such
documents:
1. The Company's Transition Report on Form 10-K for the ten months ended
January 31, 1996; 2. The Company's Amendment No. 1 on Form 10-K/A dated
October 15, 1996 to its Transition Report on Form 10-K for the ten
months ended January 31, 1996;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended April
30, 1996;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended July
31, 1996;
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1996;
6. The Company's Current Report on Form 8-K dated May 31, 1996;
7. The Company's Current Report on Form 8-K dated August 30, 1996;
8. The Company's Amendment No. 1 on Form 8-K/A dated November 15, 1996 to
its Current Report on Form 8-K dated August 30, 1996; and
9. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A as filed with the
Commission on August 12, 1993 and as amended by Amendment No. 1 on Form
8-A/A as filed with the Commission on August 26, 1993.
ITEM 4. DESCRIPTION OF SECURITIES.
No response is required to this item.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
No response is required to this item.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Registrant's Certificate of Incorporation provides for
indemnification of directors and officers of the Registrant to the full extent
permitted by Delaware law.
Section 145 of the General Corporation Law of the State of Delaware
provides generally that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at its request in
such capacity in another corporation or business association, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the
<PAGE> 3
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
In addition, pursuant to the authority of Delaware law, the Certificate
of Incorporation of the Registrant also eliminates the monetary liability of
directors to the fullest extent permitted by Delaware law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
No response to this Item is required.
ITEM 8. EXHIBITS.
The following exhibits are filed with this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
<S> <C>
4.1 Plan and Agreement of Conversion dated July 31, 1993.
4.2 Assumption Agreement dated August 30, 1996 by the Registrant to Image
Industries, Inc.
4.3 Form of Non-Qualified Stock Option Agreement.
5.1 Opinion of Smith, Gambrell & Russell, LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Smith, Gambrell & Russell, LLP (contained in their opinion filed as
Exhibit 5.1).
24.1 Powers of Attorney (contained on the signature page to this Registration
Statement).
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
II-2
<PAGE> 4
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Kennesaw, State of Georgia, on the 5th day of
December, 1996.
THE MAXIM GROUP, INC.
By: /s/ A.J. Nassar
---------------------------------
A.J. Nassar
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints A.J. Nassar and Thomas P. Leahey and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for him, in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, including a
Registration Statement filed under Rule 462(b) of the Securities Act of 1933, as
amended, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
as fully and to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated and on the dates indicated.
SIGNATURE Title Date
/s/ A.J. Nassar President, Chief Executive Officer December 5, 1996
- ---------------------- and Director (principal executive
A. J. Nassar
officer)
/s/ Thomas P. Leahey Executive Vice President, Finance December 5, 1996
- ---------------------- and Treasurer (principal financial
Thomas P. Leahey officer)
II-4
<PAGE> 6
<TABLE>
<CAPTION>
SIGNATURE Title Date
--------- ----- ----
<S> <C> <C>
/s/ H. Gene Harper Chief Financial Officer and December 5, 1996
- -------------------------- Secretary (principal accounting
H. Gene Harper officer)
/s/ James W. Inglis Senior Executive Vice President December 5, 1996
- -------------------------- and Director
James W. Inglis
/s/ Richard A. Kaplan Director December 5, 1996
- --------------------------
Richard A. Kaplan
/s/ Dicky W. McAdams Director December 5, 1996
- --------------------------
Dicky W. McAdams
/s/ Ronald McSwain Director December 5, 1996
- --------------------------
Ronald McSwain
/s/ Larry M. Miller Executive Vice President December 5, 1996
- -------------------------- and Director
Larry M. Miller
/s/ J. Michael Nixon Director December 5, 1996
- --------------------------
J. Michael Nixon
/s/ H. Stanley Padgett Executive Vice President December 5, 1996
- -------------------------- and Director
H. Stanley Padgett
/s/ M.B. Seretean Chairman of the Board December 5, 1996
- --------------------------
M.B. Seretean
/s/ Herb Wolk Director December 5, 1996
- --------------------------
Herb Wolk
</TABLE>
II-5
<PAGE> 7
Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBIT PAGE NO.
------ ---------------------- --------
<S> <C> <C>
4.1 Plan and Agreement of Conversion dated July 30, 1993.
4.2 Assumption Agreement dated August 30, 1996 by the
Registrant to Image Industries, Inc.
4.3 Form of Non-Qualified Stock Option Agreement.
5.1 Opinion of Smith, Gambrell & Russell, LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of KPMG Peat Marwick LLP.
</TABLE>
II-6
<PAGE> 1
EXHIBIT 4.1
<PAGE> 2
PLAN AND AGREEMENT OF CONVERSION
THIS PLAN AND AGREEMENT OF CONVERSION (the "Agreement") is
made and entered into as of the 30th day of July, 1993, between and among IMAGE
INDUSTRIES, INC., a Delaware corporation (the "Company"), and LARRY M. MILLER
and H. STAN PADGETT, holders of nonqualified stock options (the "Option
Holders"), and those holders of stock appreciation units who are listed on
Schedule I hereto (the "SAR Holders"). The Option Holders and the SAR Holders
are sometimes collectively referred to herein as the "Holders".
W I T N E S S E T H:
WHEREAS, the Company has adopted a 1991 Stock Option Plan (the
"1991 SOP") and has entered into agreements with each of the Option Holders
whereby the Company granted the Option Holders nonqualified stock options to
acquire the number of shares of the Company's common capital stock, $.01 par
value (the "Common Stock"), set forth opposite such Option Holder's name under
the heading 1991 SOP on Schedule II hereto; and
WHEREAS, the Company has adopted a 1991 Time Accelerated
Restricted Stock Option Plan (the "TARSOP") and has entered into agreements with
each of the Option Holders whereby the Company granted to the Option Holders
nonqualified stock options (together with the options granted under the 1991
SOP, called "Options") to acquire the number of shares of Common Stock set forth
opposite such Option Holder's name under the heading TARSOP on Schedule II
hereto; and
WHEREAS, the Company has adopted an Incentive Stock
Appreciation Rights Plan, as amended and restated (the "ISARP"), and has entered
into agreements with certain SAR Holders whereby the Company granted such SAR
Holders the right to receive the number of stock appreciation units ("SAUs") set
forth opposite such SAR Holder's name under the heading ISARP on Schedule I
hereto; and
WHEREAS, the Company has adopted a Time Accelerated Restricted
Stock Appreciation Rights Plan, as amended and restated (the "TARSARP"), and has
entered into agreements with certain SAR Holders whereby the Company granted
such SAR Holders the right to receive the number of SAUs set forth opposite such
SAR Holder's name under the heading TARSARP on Schedule I hereto; and
WHEREAS, the Company has entered into an Investor Stock
Appreciation Rights Agreement, as amended and restated (the "Investor SAR")
whereby the Company granted certain SAR Holders the right to receive the number
of SAUs set forth opposite such SAU Holder's name under the heading Investor SAR
on Schedule I hereto; and
WHEREAS, the Company is currently contemplating public
offerings of its stock (the "Offerings") pursuant to a registration statement
filed under the Securities Act of 1933; and
WHEREAS, the Holders have agreed to relinquish their existing
Options and SAUs effective upon the execution by the Company of the Underwriting
Agreement in connection with the Offerings (the "Effective Date") in exchange
for new fully vested nonqualified stock options (the "Replacement Stock
Options") to be issued by the Company effective as of the Effective Date; and
<PAGE> 3
WHEREAS, the Company has agreed to enter into Replacement
Stock Option Agreements in connection with the Offerings, pursuant to which the
Company will grant said Replacement Stock Options to the Holders in an amount
equal to all vested and unvested Options and SAUs relinquished by such Holder;
and
WHEREAS, the Company and the Holders desire to set forth
herein their agreement with respect to the cancellation of the existing option
and stock appreciation rights plans and agreements and all Options and SAUs
granted thereunder.
NOW THEREFORE, for and in consideration of the above premises,
the mutual covenants contained herein and other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, the parties
hereto do hereby agree as follows:
1. CANCELLATION OF EXISTING OPTION PLANS. As of the Effective
Date, the 1991 SOP, the TARSOP, all agreements entered into thereunder and all
Options granted pursuant thereto shall be terminated and cancelled and of no
further force and effect, without any further action on the part of the Company
or the Holders.
2. CANCELLATION OF EXISTING SAR PLANS. As of the Effective
Date, the ISARP, the TARSARP, the Investor SAR, all agreements entered into
thereunder and all SAUs granted pursuant thereto hall be terminated and
cancelled and of no further force and effect, without any further action on the
part of the Company or the Holders.
3. GRANT OF OPTIONS. In replacement of the SAUs and Options,
and subject to the terms and conditions hereinafter stated, the Company hereby
grants to the Holders that number of Replacement Stock Options set forth
opposite such Holder's name on Schedule III hereto, which shall be adjusted upon
and on the same basis as the Company's proposed stock split, currently
contemplated to be 3.294097882-to-1, such grant to be effective as of the
Effective Date and conditioned upon the execution by the Company of the
Underwriting Agreement in connection with the Offerings. The Replacement Stock
Options shall entitle the Holder to purchase shares of Common Stock at a
purchase price of $.01 for each share of Common Stock acquired. Immediately
after the Effective Date, the Company and each Holder shall execute and deliver
a Replacement Stock Option Agreement in the form attached hereto as Exhibit "A,"
which agreement shall set forth the terms and conditions of exercise of the
Replacement Stock Options.
4. TAXATION OF OPTIONS.
(a) The Company does hereby agree that in the event
that prior to the sale by a Holder who is an employee of the Company as of the
date hereof (the "Employee Holders") of the shares of Common Stock underlying
the Replacement Stock Options, any federal or state taxing authority finally
determines that the grant of the Replacement Stock Options pursuant to
Replacement Stock Option Agreements is a taxable event to the Holders on the
date of grant, the Company will lend to the Employee Holders the funds necessary
to pay any federal or state income tax liability incurred by such Employee
Holder which is attributable solely to such event (after taking into
consideration all items of income, loss deduction or credit, including
adjustments thereto, of the Employee Holder); provided that the Employee Holder
shall repay all such funds, without interest, to the Company within six (6)
months of the date of such loan. All such loans shall be evidenced by a
promissory note in favor of the Company whereby the Employee Holder shall be
personally obligated to repay the loan, secured by a pledge of all
2
<PAGE> 4
of the Common Stock owned by such Employee Holder and the Common Stock issuable
upon the exercise of the Replacement Stock Options. As a condition to the making
of any such loan to an Employee Holder, such Holder shall be required to execute
and deliver to the Company a Promissory Note substantially in the form as
Exhibit "B" attached hereto (the "Note"), and a Stock Pledge Agreement,
substantially in the form as Exhibit "C" attached hereto, together with an
appropriate stock power in favor of the Company, and to deliver all such
instruments and certificates for Common Stock owned or held by such Employee
Holder to the Company at the time of the loan. In the event of a default on any
loan, the Company shall be entitled to exercise the Replacement Stock Options in
the name of the Employee Holder and to sell a sufficient number of shares of
Common Stock owned by such Employee Holder in order to pay in full the
obligations to the Company under the Note and shall have such other rights as
described in the Stock Pledge Agreement.
(b) The Company further agrees that it will pay
a bonus (the "Bonus"), subject to applicable withholding taxes, to such Employee
Holder in the amount of any interest or penalties imposed by any federal or
state taxing authority upon such Employee Holder resulting from the failure of
the Employee Holder to report the grant of the Replacement Stock Options as a
taxable event; provided, however, that (i) if such final determination by any
federal or state taxing authority is made after the sale by the Employee Holder
of the shares of Common Stock underlying the Replacement Stock Options, the
Company shall pay the Bonus (in the amount of all such penalties and interest
accrued through the date of the sale of the Common Stock) at the request of the
Employee Holder so that the payment of the Bonus by the Company will coincide
with the payment of the tax liability by the Holder; and (ii) if such
determination by any federal or state taxing authority is made before the sale
by the Holder of the shares of Common Stock underlying the Replacement Stock
Options, the Company will pay the Bonus (in the amount of all such interest and
penalties through the date of the loan by the Company to the Employee Holder),
and payment of the Bonus will be made by the Company on the date of such loan.
At the Company's option, payment of the Bonus and the tax liability may be made
directly to the federal or state taxing authority for the benefit of the
Employee Holder, and the income tax portion thereof shall be deemed a loan to
Employee Holder and shall comprise the amount of the Note.
The Company and the Holders acknowledge that the
Holders will not be required to contest any such determination by federal or
state taxing authority and the Company may contest, in the names of the Holders,
such determination if it chooses to do so, at its own expense, provided that any
interest or penalties that continue to accrue during a contest of such
determination by the Company shall be the responsibility of the Company. Each of
the Holders shall promptly notify the Company of any communication from any
federal or state taxing authority concerning the Replacement Stock Options, and
does hereby covenant and agree that he shall not take a position on any federal,
state or other tax return or filing concerning the taxability of the Replacement
Stock Options which is inconsistent with the position taken by the Company that
the event of exercise, rather than the event of grant, of the Replacement Stock
Options is the proper taxable event, and in the event of a breach of this
covenant, the Company shall have no obligation to make the aforementioned loan
to the Employee Holders or to pay any Bonus as described above. Each Employee
Holder does hereby acknowledge and agree that any and all payments to or for the
benefit of such Holder shall be deemed to be compensation to such Holder in
consideration for past and future services.
(c) The Company shall have no obligation: (i)
to make any loans with respect to the tax effect on any Holder arising from the
loans or payments set forth in paragraphs 4(a) and (b) above to or for the
benefit of a Holder; or (ii) to make any payments or loans with respect to the
tax
3
<PAGE> 5
incidents arising from the loans and payments set forth in paragraphs 4(a) and
(b) above, exercise of the Replacement Stock Options or sale or disposition of
the underlying shares of Common Stock.
(d) Each Holder does hereby acknowledge and
agree that it is the intent of the parties hereto that each Holder shall be
responsible for any and all income taxes required to be withheld by the Company
upon exercise of the Replacement Stock Options, and each Holder hereby agrees to
provide the Company no less than fifteen (15) days' prior written notice of his
or her intent to exercise the Replacement Stock Options and to repay the Company
the amount of any income taxes required to be withheld by the Company upon such
exercise, or upon grant if withholding is required pursuant to the provisions of
Section 4(a) above, all as set forth in the Replacement Stock Option Agreement.
Alternatively, the Company shall have the right to retain and sell such Holder's
shares of Common Stock issuable upon exercise of the Replacement Stock Options
in order to satisfy such obligation.
5. RESTRICTION ON SALE OF STOCK. In connection with the
Company's agreement hereunder, each Holder agrees not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Replacement Stock Options or any shares of Common Stock of the Company purchased
by such Holder on the exercise of the Replacement Stock Options, for a period of
one hundred eighty (180) days from the Effective Date, and to execute an
appropriate Lock-up Agreement to further evidence said obligation.
6. REGISTRATION RIGHTS. Simultaneously herewith, the Company
and the Holders have entered into a Registration Rights Agreement whereby the
Company has agreed to file a registration statement under the Securities Act of
1933 to register the shares of Common Stock underlying the Replacement Stock
Options upon the terms set forth in the Registration Rights Agreement.
7. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
HOLDERS. This Agreement and obligations of the Company and the Holders hereunder
are conditioned upon the execution by the Company of the Underwriting Agreement
in connection with the Offerings. In the event that such Underwriting Agreement
is not executed within ninety (90) days of the date hereof, this Agreement shall
be null and void and of no force and effect and shall automatically terminate,
and the 1991 SOP, the TARSOP, the ISARP, the TARSARP and the Investor SAR shall
continue in effect in accordance with the terms thereof and shall be unaffected
hereby.
8. GRANT OF REMAINING SAUS IN EMPLOYEE POOL. Upon the
Effective Date, all unallocated existing SAUs remaining in the employee pool
under the ISARP and the TARSARP shall be deemed to have been granted to the
Holders set forth on Schedule IV hereto and in the amounts set forth opposite
such Holder's name on said schedule, and such SAUs shall be replaced in full by
the Replacement Stock Options set forth on Schedule III. If the Underwriting
Agreement in connection with the Offerings is not executed by the Company within
ninety (90) days of the date hereof, such SAUs shall not be deemed to have been
granted but shall remain unallocated and unissued.
9. MISCELLANEOUS.
(a) Further Assurances. The parties hereto
agree to execute and deliver any and all agreements and documents which may be
reasonable necessary to carry out the intent of this Agreement.
4
<PAGE> 6
(b) Entire Agreement. All exhibits and
schedules hereto shall be deemed to be incorporated into and made a part of this
Agreement. This Agreement together with the exhibits and schedules hereto and
the documents referenced herein contain the entire agreement among the parties,
and there are no agreements, representations or warranties which are not set
forth herein. This Agreement may not be amended or revised except by a writing
signed by all parties hereto.
(c) Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successor and assigns; provided, however, this Agreement and all rights
hereunder may not be assigned by any Holder except with the prior written
consent of the Company.
(d) Separate Counterparts. This Agreement may
be executed in several identical counterparts, all of which when taken together
shall constitute but one instrument, and it shall not be necessary in any court
of law to introduce more than one fully executed counterpart in proving this
Agreement.
(e) Severability. The provisions of this
Agreement are several, and the invalidity of any provision shall not affect the
validity of any other provision.
(f) Captions. The captions have been inserted
solely for convenience of reference and in no way define, limit or describe the
scope or substance of any provision of this Agreement.
(g) Governing Law. The execution,
interpretation and performance of this Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without regard to
a choice or conflict of law provision of said state.
[EXECUTION SET FORTH ON FOLLOWING PAGE]
5
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have set forth their
respective hands and seals as of the date first above written.
THE COMPANY:
IMAGE INDUSTRIES, INC.
BY: /s/ H. Stan Padgett
-------------------------------------------------
H. STAN PADGETT, President
OPTION HOLDERS:
/s/ H. Stan Padgett (SEAL)
------------------------------------------------------
H. STAN PADGETT
/s/ Larry M. Miller/by H. Stan Padgett (SEAL)
------------------------------------------------------
LARRY M. MILLER
SAR HOLDERS:
/s/ H. Stan Padgett (SEAL)
------------------------------------------------------
H. STAN PADGETT
/s/ Larry M. Miller/by H. Stan Padgett (SEAL)
------------------------------------------------------
LARRY M. MILLER
/s/ Sue Pettit/by H. Stan Padgett (SEAL)
------------------------------------------------------
SUE PETTIT
/s/ Andrew J. Montgomery/by H. Stan Padgett (SEAL)
------------------------------------------------------
ANDREW J. MONTGOMERY
/s/ Edward R. Melcowsky/by H. Stan Padgett (SEAL)
------------------------------------------------------
EDWARD R. MELCOWSKY
6
<PAGE> 8
/s/ Lawrence S. Kovich/by H. Stan Padgett (SEAL)
-----------------------------------------------------
LAWRENCE S. KOVICH
/s/ Lawrence A. Poston/by H. Stan Padgett (SEAL)
-----------------------------------------------------
LAWRENCE A. POSTON
/s/ Harold Wayne Thomerson/by H. Stan Padgett (SEAL)
-----------------------------------------------------
HAROLD WAYNE THOMERSON
/s/ John E. Richmeier/by H. Stan Padgett (SEAL)
-----------------------------------------------------
JOHN E. RICHMEIER
/s/ Charles D. Pope/by H. Stan Padgett (SEAL)
-----------------------------------------------------
CHARLES D. POPE
/s/ Ted R. Williams/by H. Stan Padgett (SEAL)
-----------------------------------------------------
TED R. WILLIAM
/s/ Deborah A. Akins/by H. Stan Padgett (SEAL)
-----------------------------------------------------
DEBORAH A. AKINS
/s/ Arthur G. Peppers, Jr./by H. Stan Padgett (SEAL)
-----------------------------------------------------
ARTHUR G. PEPPERS, JR.
/s/ James E. Meredith/by H. Stan Padgett (SEAL)
-----------------------------------------------------
JAMES E. MEREDITH
/s/ James W. Dillard, Sr./by H. Stan Padgett (SEAL)
-----------------------------------------------------
JAMES W. DILLARD, SR.
/s/ William M. Byars/by H. Stan Padgett (SEAL)
-----------------------------------------------------
WILLIAM M. BYARS
/s/ Jerry H. Johnston/by H. Stan Padgett (SEAL)
-----------------------------------------------------
JERRY H. JOHNSTON
7
<PAGE> 9
/s/ Harry Foss/by H. Stan Padgett (SEAL)
-----------------------------------------------------
HARRY FOSS
/s/ Kevin P. Hayes/by H. Stan Padgett (SEAL)
-----------------------------------------------------
KEVIN P. HAYES
/s/ Kenneth A. Kizziah/by H. Stan Padgett (SEAL)
-----------------------------------------------------
KENNETH A. KIZZIAH
/s/ Paul Merideth (SEAL)
-----------------------------------------------------
PAUL MERIDETH
/s/ Susan S. Carter/by H. Stan Padgett (SEAL)
-----------------------------------------------------
SUSAN S. CARTER
/s/ Michael W. Zima (SEAL)
-----------------------------------------------------
MICHAEL W. ZIMA
/s/ James L. Payne/by H. Stan Padgett (SEAL)
-----------------------------------------------------
JAMES L. PAYNE
/s/ Marion D. Deese/by H. Stan Padgett (SEAL)
-----------------------------------------------------
MARION D. DEESE
/s/ Tracy A. Thomas/by H. Stan Padgett (SEAL)
-----------------------------------------------------
TRACY A. THOMAS
/s/ Edna Kay Bishop/by H. Stan Padgett (SEAL)
-----------------------------------------------------
EDNA KAY BISHOP
/s/ Jean D. Stowe/by H. Stan Padgett (SEAL)
-----------------------------------------------------
JEAN D. STOWE
/s/ W. Keith Grigsby/by H. Stan Padgett (SEAL)
-----------------------------------------------------
W. KEITH GRIGSBY
8
<PAGE> 10
/s/ William R. Turner, Jr./by H. Stan Padgett (SEAL)
-----------------------------------------------------
WILLIAM R. TURNER, JR.
/s/ William Glenn Henderson/by H. Stan Padgett (SEAL)
-----------------------------------------------------
WILLIAM GLENN HENDERSON
/s/ Mohd Rauf Chitalwala/by H. Stan Padgett (SEAL)
-----------------------------------------------------
MOHD RAUF CHITALWALA
/s/ Phil Cavin/by H. Stan Padgett (SEAL)
-----------------------------------------------------
PHIL CAVIN
/s/ Harry W. Shearer/by H. Stan Padgett (SEAL)
-----------------------------------------------------
HARRY W. SHEARER
/s/ Anne M. Shearer/by H. Stan Padgett (SEAL)
-----------------------------------------------------
ANNE M. SHEARER
/s/ Hugh D. Bennett (SEAL)
-----------------------------------------------------
HUGH D. BENNETT
/s/ Durwood W. French/by H. Stan Padgett (SEAL)
-----------------------------------------------------
DURWOOD W. FRENCH
/s/ Robert C. King/by H. Stan Padgett (SEAL)
-----------------------------------------------------
ROBERT C. KING
/s/ C. Houston Ward/by H. Stan Padgett (SEAL)
-----------------------------------------------------
C. HOUSTON WARD
GRISANTI, GALEF & GOLDRESS
By: /s/ Grisanti, Galef & Goldress/by H. Stan Padgett
Its:
-------------------------------------------------
9
<PAGE> 11
SCHEDULE I
SAR HOLDERS
<TABLE>
<CAPTION>
INVESTOR
ISARP TARSARP SAR
----- ------- ---
<S> <C> <C> <C>
Sue Pettit 3,036 0 0
Andrew J. Montgomery 704 796 0
Edward R. Melcowsky 907 1,093 0
Lawrence S. Kovich 453 547 0
Lawrence A. Poston 250 250 0
Harold Wayne Thomerson 381 441 0
John E. Richmeier 703 797 0
Charles D. Pope 657 843 0
Ted R. Williams 453 547 0
Deborah A. Akins 453 547 0
Arthur G. Peppers, Jr. 453 547 0
James E. Meredith 3,035 3,036 0
James W. Dillard, Sr. 453 547 0
William M. Byars 453 547 0
Jerry H. Johnston 703 797 0
Harry Foss 453 547 0
Kevin P. Hayes 453 547 0
Kenneth A. Kizziah 454 546 0
Paul Merideth 9,108 9,107 0
Susan S. Carter 454 546 0
Michael W. Zima 454 546 0
James L. Payne 407 593 0
Marion D. Deese 407 593 0
Tracy A. Thomas 204 296 0
Edna Kay Bishop 204 296 0
Jean D. Stowe 204 296 0
W. Keith Grigsby 204 296 0
William R. Turner, Jr. 204 296 0
William Glenn Henderson 204 296 0
Mohd Rauf Chitalwala 407 593 0
Phil Cavin 407 593 0
H. Stan Padgett 18,530 18,530 74,370
Harry W. Shearer 2,941 2,941 1,500
Anne M. Shearer 0 0 10,833
Hugh D. Bennett 2,941 2,941 12,333
Durwood W. French 2,941 2,941 12,333
Robert C. King 2,941 2,941 12,333
C. Houston Ward 2,941 2,941 12,333
Grisanti, Galef & Goldress 0 0 30,000
------- ------- ------
Total: 60,557 60,557 166,035
</TABLE>
10
<PAGE> 12
SCHEDULE II
OPTION HOLDERS
<TABLE>
<CAPTION>
1991 SOP TARSOP
-------- ------
<S> <C> <C>
Larry M. Miller 23,530 23,530
H. Stan Padgett 5,000 5,000
------- ------
Total: 28,530 28,530
</TABLE>
11
<PAGE> 13
SCHEDULE III
REPLACEMENT STOCK OPTIONS TO BE GRANTED
<TABLE>
<CAPTION>
NUMBER OF
REPLACEMENT
NAME STOCK OPTIONS (1)
- ---- -----------------
<S> <C>
H. Stan Padgett 121,430
Harry W. Shearer 7,382
Anne M. Shearer 10,833
Hugh D. Bennett 18,215
Durwood W. French 18,215
Robert C. King 18,215
C. Houston Ward 18,215
Grisanti, Galef & Goldress 30,000
Larry M. Miller 47,060
Sue Pettit 3,036
Andrew J. Montgomery 1,500
Edward R. Melocowsky 2,000
Lawrence S. Kovich 1,000
Lawrence A. Poston 500
Harold Wayne Thomerson 822
John E. Richmeier 1,500
Charles D. Pope 1,500
Ted R. Williams 1,000
Deborah A. Akins 1,000
Arthur G. Peppers, Jr. 1,000
James E. Meredith 6,071
James W. Dillard, Sr. 1,000
William M. Byars 1,000
Jerry H. Johnston 1,500
Harry Foss 1,000
Kevin P. Hayes 1,000
Kenneth A. Kizziah 1,000
Paul Meredith 18,215
Susan S. Carter 1,000
Michael W. Zima 1,000
James L. Payne 1,000
Marion D. Deese 1,000
Tracy A. Thomas 500
Edna Kay Bishop 500
Jean D. Stowe 500
W. Keith Grigsby 500
William R. Turner, Jr. 500
William Glenn Henderson 500
Mohd Rauf Chitalwala 1,000
Phil Cavin 1,000
-------
Total: 344,209
</TABLE>
- -----------------------
(1) This number will be adjusted upon and on the same basis as the
stock split currently contemplated by the Company at
3.294097882 shares for each existing share.
12
<PAGE> 14
<TABLE>
<CAPTION>
SCHEDULE IV
ISARP TARSARP
----- -------
<S> <C> <C>
Andrew J. Montgomery 204 296
Edward R. Melocowsky 407 593
Lawrence S. Kovich 203 297
John E. Richmeier 203 297
Charles D. Pope 407 593
Ted R. Williams 203 297
Deborah A. Akins 203 297
Arthur G. Peppers, Jr. 203 297
James W. Dillard, Sr. 203 297
William M. Byars 203 297
Jerry J. Johnston 203 297
Harry Foss 203 297
Kevin P. Hayes 203 297
Kenneth A. Kizziah 204 296
Susan S. Carter 204 296
Michael W. Zima 204 296
James L. Payne 407 593
Marion D. Deese 407 593
Tracy A. Thomas 204 296
Edna Kay Bishop 204 296
Jean D. Stowe 204 296
W. Keith Grigsby 204 296
William R. Turner, Jr. 204 296
William Glenn Henderson 204 296
Mohd Rauf Chitalwala 407 593
Phil Cavin 407 593
Harold Wayne Thomerson 131 191
</TABLE>
13
<PAGE> 15
EXHIBIT "A"
REPLACEMENT STOCK OPTION AGREEMENT ("OPTION AGREEMENT") DATED
AS OF _______________ 1993, BETWEEN IMAGE INDUSTRIES, INC., A
DELAWARE CORPORATION (THE "COMPANY"), AND THE INDIVIDUAL
LISTED ON THE SIGNATURE PAGE HERETO AS THE OPTION HOLDER,
("OPTION HOLDER')
On this date, the Company granted to the Option Holder the nonqualified
stock option(s) hereinafter described pursuant to this Option Agreement, and
subject to and upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
hereby agree as follows:
1. Subject to all of the terms of that certain Plan and Agreement of
Conversion entered into as of the ___ day of July, 1993, by and among the
Company and Option Holder (the "Plan"), on this date (hereinafter the "Effective
Date"), the Company hereby grants to the Option Holder, as a matter of separate
agreement and not in lieu of salary or any other compensation for services, the
right and option to purchase all or any part of that aggregate number of shares
of the Company's common stock, $.01 par value per share (the "Common Stock") as
set forth on Schedule I hereto opposite the name of the Option Holder, on the
terms and conditions herein set forth (the "Option").
2. The purchase price of the shares of Common Stock subject to the
Option shall be $.01 per share.
3. Subject to the provisions of paragraph 5 of this Option Agreement
and subject to the terms of that certain Lock-up Letter in favor of Shearson
Lehman Brothers, Inc., Prudential Securities Incorporated, Lehman Brothers
International (Europe) and Prudential Bache Securities (U.K.) Inc., the Option
shall be exercisable in whole at any time or in part from time to time after the
date hereof and during the term of the Option as to all or any of the shares of
Common Stock then available for purchase under the Option, but not as to less
than 50 shares (or the shares then purchasable under the Option if less than 50
shares) at any one time. Subject to paragraph 4, the term of the Option shall
begin on the date hereof and shall expire on March 30, 2006. The Option Holder
shall have none of the rights of a shareholder with respect to the shares of
Common Stock subject to the Option until such shares shall have been transferred
to the Option Holder upon the exercise of the Option in accordance herewith and
with the terms of the Plan.
4. Subject to the rights of the Company under Section 4 of the Plan,
the Option shall not be transferable by the Option Holder otherwise than by will
or the laws of descent and distribution, and the Option is exercisable, during
the Option Holder's lifetime, only by the Option Holder. The designation of a
beneficiary by an Option Holder shall not constitute a transfer. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as aforesaid), pledged or encumbered in
any way, unless in favor of the Company (whether by operation of law or
otherwise), and shall not be subject to execution, attachment or similar
process, except by the Company. In the event of any attempted assignment,
transfer, pledge, encumbrance or other disposition of the Option contrary to the
provisions hereof, or the levy of any attachment or similar process upon the
Option, the Option and any such attempted assignment, transfer, pledge,
encumbrance or disposition shall be null and void and of no further effect. The
Option Holder further covenants and agrees that (i)
<PAGE> 16
the shares of Common Stock underlying the Option (to the extent not exercised)
shall be subject to each of the restrictions set forth in this paragraph above,
and (ii) he shall not enter into any agreement whatsoever prohibiting or
restricting the pledge of the shares of Common Stock issuable upon exercise of
the Option to the Company to secure the loan described in Section 4 of the Plan
(the "Loan"), and in the event the Option Holder breaches this provision and
enters into any such agreement, the Company will have no obligation to make the
Loan to the Option Holder.
5. If the Option Holder shall die, the Option may be exercised in full
for the aggregate number of shares of Common Stock covered thereby by the
legatee or legatees of the Option under the Option Holder's last will, or by the
personal representatives or distributees of the estate of the Option Holder,
during the term of the Option as defined by and subject to the provisions of
paragraph 3, above.
6. If all or any portion of the Option is exercised subsequent to any
stock dividend, stock split, recapitalization, combination, exchange of shares,
merger, consolidation, liquidation, split-up, split-off, spin-off or other
similar change in capitalization, any distribution to common shareholders,
including a rights offering, other than cash dividends, or any like change, the
Board of Directors of the Company (the "Board") or the Compensation Committee
established by the Board (the "Committee") shall make such appropriate
adjustments in the purchase price paid upon exercise of the Option and the
aggregate number and class of shares of Common Stock or other securities or
property issuable upon any such exercise as the Board or Committee shall, in its
sole discretion, determine. In any such event, no fractional share shall be
issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued; further,
the minimum number of full shares of Common Stock which may be purchased upon
any such exercise shall be the minimum number specified in paragraph 3 adjusted
proportionately.
7. Payment of the purchase price of the shares of Common Stock subject
to the Option shall be made in cash or in whole shares of Common Stock already
owned by the Option Holder or partly in cash and partly in such Common Stock.
Subject to the terms and conditions of this Option Agreement, the Option may be
exercised by written notice to the Company at its principal office, attention of
the President. Such notice shall (a) state the election to exercise the Option,
the number of shares of Common Stock in respect of which it is being exercised
and the manner of payment for such shares and (b) be signed by the person or
persons so exercising the Option and, in the event the Option is being exercised
pursuant to paragraph 5 by any person or persons other than the Option Holder,
accompanied by appropriate proof of the right of such person or persons to
exercise the Option. Such notice shall either (i) be accompanied by payment of
the full purchase price of such shares of Common Stock, in which event the
Company shall issue and deliver a certificate or certificates representing such
shares as soon as practicable after the notice is received, or (ii) fix a date
(not more than 10 business days from the date of such notice) for the payment of
the full purchase price of such shares at the Company's principal office,
against delivery of a certificate or certificates representing such shares. Cash
payments of such purchase price shall, in either case, be made by cash or
certified check payable to the order of the Company. Common Stock payments
(valued at Market Price, as defined below, on the date of exercise) shall be
made by delivery of stock certificates in negotiable form either duly endorsed
in blank for transfer or accompanied by a duly executed stock power. All cash
and Common Stock payments shall, in either case, be delivered to the Company at
its principal office, attention of the President. If certificates representing
Common Stock are used to pay all or part of the purchase price of the Option, a
separate certificate shall be delivered by the Company representing the same
number of shares as each certificate so used, and an additional certificate
shall be delivered representing the additional shares to which the holder of the
Option is entitled as a result of the exercise of the Option. The certificate or
2
<PAGE> 17
certificates for the shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons so exercising the
Option and shall be delivered as aforesaid to or upon the written order of the
person or persons exercising the Option. All shares issued as provided herein
will be fully paid and nonassessable.
For purposes hereof, the term "Market Price" shall mean at any date,
the mean between the high and low sales prices of a share of Common Stock on the
NYSE Composite Tape or, if the Common Stock is not listed or admitted to trading
on the NYSE, the mean between the high and low sales prices of a share of Common
Stock on the principal national securities exchange on which the Common Stock is
listed, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the mean between the high and low sales prices of
a share of Common Stock in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ"), or, if the Common Stock is not reported by NASDAQ, the mean between
the high and low sales prices of a share of Common Stock as reported by the
National Quotation Bureau Incorporated, or, in all other cases, the value set in
good faith by the Committee.
8. The Option Holder hereby agrees to provide the Company no less than
fifteen (15) days prior written notice of his or her intent to exercise the
Option and to repay the Company the amount of Withholding Tax upon exercise, or
at such earlier time as the Option may be determined to be taxable to the Option
Holder, as set forth in the Plan. The Company shall have the right to retain or
sell without notice, or to demand surrender of, shares of Common Stock in value
sufficient to cover any Withholding Tax (that is, any tax including any Federal,
state or local income tax, required by any governmental entity to be withheld or
otherwise deducted and paid with respect to the Option), and to make payment (or
to reimburse itself for payment made) to the appropriate taxing authority of an
amount in cash equal to the amount of such Withholding Tax, remitting any
balance to the Option Holder. For purposes of this paragraph, the value of
shares of Common Stock so retained, sold or surrendered shall be determined by
the Committee and shall not be less than Market Price on the date that the
amount of the Withholding Tax is to be determined (the "Tax Date"), and the
value of shares of Common Stock so retained or sold shall be the actual net sale
price per share (after deduction of commissions) received by the Company.
Notwithstanding the foregoing, the person exercising the Option shall
be entitled to satisfy the obligation to pay any Withholding Tax, in whole or in
part, by providing the Company with funds sufficient to enable the Company to
pay such Withholding Tax or by requiring the Company to retain or to accept upon
delivery thereof by the Option Holder shares of Common Stock sufficient in value
(determined in accordance with the last sentence of the preceding paragraph) to
cover the amount of such Withholding Tax. Each such election to have shares
retained or to deliver shares for this purpose shall be subject to the following
restrictions: (i) the election must be in writing and made on or prior to the
Tax Date; and (ii) if the person exercising the Option is subject to Section 16
of the Exchange Act of 1934, the election to have shares retained to satisfy the
Withholding Tax must either (a) be an irrevocable election made after the
Effective Date and at least six months prior to the Tax Date or (b) take effect,
or with respect to elections made prior to the Effective Date, be made, during
the ten business day "window period" beginning on the third business day
following the date on which the Company releases for publication its annual or
quarterly financial statements and ending on the twelfth business day following
the date of release thereof.
9. The Company shall at all times during the term of the Option reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Option Agreement, shall pay all fees and
expenses necessarily incurred by the Company in connection with the
3
<PAGE> 18
issue of shares pursuant hereto and will from time to time use its best efforts
to comply with all laws and regulations which, in the opinion of counsel for the
Company, shall be applicable thereto.
10. As used herein, the term "Common Stock" shall, except as otherwise
indicated by the context, mean the Common Stock, par value $.01 per share, of
the Company as authorized on the date hereof.
11. This Option Agreement has been entered into pursuant to and shall
be governed by the laws of the State of Georgia.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
duly executed by its officer "hereunto duly authorized, and the Option Holder
has hereunto set his or her hand and seal, all as of the day and year first
above written.
COMPANY
IMAGE INDUSTRIES, INC.,
By:
---------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
OPTION HOLDER
------------------------------------------
Name:
-------------------------------------
Address:
----------------------------------
------------------------------------------
4
<PAGE> 19
EXHIBIT "B"
PROMISSORY NOTE
$ ___________________ ______________, 19____
FOR VALUE RECEIVED, (the "Payor") promises to pay to the order of Image
Industries, Inc. (the "Payee") the principal sum of
___________________________________________ DOLLARS ($__________), in full on
the six-month anniversary of the date hereof in the legal tender of the United
States, payable in cash or by cashier's check at the principal office of the
Payee located at Highway 140 Armuchee, Georgia, or at such other place as the
Payee or other holder hereof may designate in writing; provided that the
principal amount hereof shall be due and payable at such earlier time and from
time to time to the extent of any proceeds received by the Payor from a sale of
the Stock (as defined below).
Should the principal amount not be paid when due, or should a default
occur under the Stock Pledge Agreement of even date herewith, conveying title to
(i) common stock of Payee ("Stock") currently owned by Payor and (ii) Stock
issuable upon exercise of options to acquire Stock of Payee as security for this
indebtedness, the entire unpaid principal sum evidenced by this Note shall
without notice to Payor, presentation or demand, become due and may be collected
forthwith, time being of the essence of this Note. It is further agreed that
failure of the Payor to exercise this right of accelerating the maturity of the
debt, or any other indulgence granted from time to time, shall in no event be
considered as a waiver of such right of acceleration or estop the Payee from
exercising such right.
In the event the principal amount is not paid when due, such amount
shall bear interest at the rate of ten percent (10%) per annum from maturity.
Should this Note, or any part of the indebtedness evidenced hereby, be collected
by law or through an attorney, the holder shall be entitled to collect
attorneys' fees in an amount equal to fifteen percent (15%) of the principal and
interest and all costs of collection.
This Note shall be governed by and construed under the laws of the
State of Georgia and shall be binding upon the Payor and his heirs, legal
representatives and successors and shall inure to the benefit of Payee, its
successors and assigns. Each of the undersigned, whether principal, surety,
guarantor, endorser, or other party, severally waives and renounces, each for
himself and his family, any and all homestead and exemption rights he or his
family may have under or by virtue of the laws of the State of Georgia, or any
other State, or the United States, as against this debt or any renewal or
extension thereof, and further waives demand, protest, notice of demand, protest
and nonpayment.
WITNESS the hand(s) and seal(s) of the undersigned as of the date first
above written.
PAYOR:
(SEAL)
- --------------------------- ----------------------------
Witness Name:
<PAGE> 20
EXHIBIT "C"
STOCK PLEDGE AGREEMENT
THIS AGREEMENT (the "Agreement"), made as of the _____ day of
_______________, 19___, by and between ______________________________, a
____________ resident (hereinafter called "Pledgor") and Image Industries, Inc.
(hereinafter called "Pledgee").
W I T N E S S E T H :
WHEREAS, pursuant to a Plan and Agreement of Conversion dated July _,
1993 (the "Conversion Agreement"), the Pledgor has executed a Promissory Note in
favor of Pledgee in the principal amount of $____________ (the "Note"); and
WHEREAS, Pledgor desires to provide security for prompt and complete
payment of the Note by hypothecating to Pledgee all of the shares of stock owned
by Pledgor as hereinafter described, on the terms and conditions hereinafter set
forth;
IT IS THEREFORE AGREED:
1. PLEDGE.
In consideration of the extension of credit by Pledgee as evidenced by
the Note, the Pledgor hereby pledges, hypothecates and assigns to the Pledgee
______ shares of the issued and outstanding common capital stock of Pledgee (the
"Common Stock") owned by Pledgor represented by share certificate no(s). _____
and all Common Stock underlying and issuable upon exercise of the nonqualified
options to acquire shares of Common Stock (the "Options") evidenced by that
certain Replacement Stock Option Agreement between Pledgee and Pledgor dated
__________, 1993 (the "Option Agreement") (collectively, the "Pledged Stock").
Pledgor does herewith deliver to Pledgee the certificates representing the
Pledged Stock and accompanying stock powers as evidence of the pledge and
security interest granted hereby.
2. TERM.
The Pledged Stock shall remain pledged to the Pledgee until the Note is
paid in full, whereupon Pledgor shall be entitled to full right and title to,
and possession of, the Pledged Stock free and clear of any liens, claims or
encumbrances or any rights of the Pledgee.
3. VOTING RIGHTS AND DIVIDENDS.
During the term of this pledge and so long as the Pledgor is not in
default in the performance of any of the terms of the Note or as otherwise
defined this Agreement (a) the Pledgor shall have the right to vote the Pledged
Stock on all corporate questions, and the Pledgee shall execute, if requested by
Pledgor, due and timely proxies in favor of the Pledgor to this end; (b) any
cash dividends and other amounts hereafter declared or payable with respect to
the Pledged Stock shall be received by Pledgor and shall be free from any claim
by Pledgee under this Agreement or the Note; and (c) the Pledgor shall have the
right to exercise the Options and acquire Common Stock thereunder upon notice to
the Company as provided by and in accordance with the terms of the Option
Agreement.
<PAGE> 21
4. ADJUSTMENTS.
In the event that, during the term of the pledge, any share dividend,
reclassification, readjustment or other change is declared or made, or any of
the Options are exercised with respect to any shares of Common Stock, all new,
substituted or additional shares, or other securities issued by reason of any
such change or exercise, shall be immediately pledged to Pledgee under the terms
of this Agreement in the same manner as the Pledged Stock and shall be delivered
to Pledgee. Pledgor does hereby authorize and instruct, and authorizes the
Pledgee to instruct, the Pledgee's stock transfer agent (the "Transfer Agent"),
who shall be entitled to rely upon this instrument and Pledgee's sole
instruction as evidence of its authority to deliver any such shares of Common
Stock directly to the Pledgee, and Pledgor shall execute and deliver any other
such authorizations as necessary to effect the perfection of the pledge granted
hereby and delivery of the Pledged Stock to Pledgor.
5. DEFAULT; POWER OF ATTORNEY.
A default in the performance of any of the terms of the Note, the
Conversion Agreement, the Option Agreement or this Agreement shall be deemed a
default hereunder, and the Pledgee shall have the rights and remedies provided a
secured creditor in the Uniform Commercial Code, Official Code of Georgia,
Chapter 11-9, and any other applicable laws, in addition to all other rights and
remedies under the Conversion Agreement, Note, Option Agreement and this Stock
Pledge Agreement. In the event of such default, the Pledgee may and is hereby
authorized (a) to initiate the transfer of the Pledged Stock into the name of
the Pledgee and to instruct the Transfer Agent to effectuate the same; (b) to
exercise the Options in the name of the Pledgor, and the Common Stock issuable
thereupon shall be issued in Pledgor's name and delivered to the Pledgee; and
(c) to vote any or all of the Pledged Stock (whether or not the same has been
transferred into its name) and give consents, waivers and ratifications in
respect to the Pledged Stock and otherwise act with respect thereto as though it
were the outright owner thereof. The Pledgor hereby irrevocably constitutes and
appoints the Pledgee as the proxy and attorney-in-fact of the Pledgor to take
any and all actions necessary or appropriate to effect the provisions of this
Agreement upon the occurrence of and during the continuance of an event of
default, with full power of substitution, and revoking all other proxies.
Pledgee shall not at any time encumber or otherwise dispose of shares of Pledged
Stock except in the event of a default under the Note and in accordance with the
provisions of this Agreement. If any notification of intended disposition of any
of the Pledged Stock is required by law, such notification, if mailed, shall be
deemed reasonably and properly given if mailed to Pledgor in accordance with the
notification provisions in the Option Agreement, attached hereto and
incorporated herein by reference.
In addition to the rights set forth above, in the event of a default as
described herein, the Pledgee shall have the right to:
(a) sell, transfer, assign or otherwise dispose of the Pledged
Stock for cash or credit, at any public or private sale in a commercially
reasonable manner and for such reasonable price as the Pledgee may determine. In
the event of such a sale, the Pledgee must account to the Pledgor for any
surplus realized, and the Pledgor shall be liable to Pledgee for any deficiency
in respect of amounts owed Pledgee under the Note;
(b) convey the Pledged Stock to Pledgor and reduce its entire
claim for the Note to judgment; or
2
<PAGE> 22
(c) instruct the Transfer Agent to effectuate the provisions
of this Agreement.
6. COVENANTS OF PLEDGOR.
The Pledgor hereby covenants that until such time as the Note shall be
paid in full, the Pledgor will not sell, convey or otherwise dispose of any
shares of the Pledged Stock or any interest therein, nor will the Pledgor
create, incur or permit to exist any pledge, mortgage, lien, charge, encumbrance
or any security interest whatsoever with respect to any of the Pledged Stock or
the proceeds thereof other than that created hereby.
7. GENERAL.
This Agreement shall be binding upon and inure to the benefit of the
parties, their legal representatives, heirs and assigns. This Agreement is given
under and shall in all respects be governed by the laws of the State of Georgia.
No modification, amendment or waiver of the terms hereof shall be valid or
effective unless in writing and signed by all of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
"PLEDGOR"
(SEAL)
- -------------------------- ---------------------------------
Witness
"PLEDGEE"
IMAGE INDUSTRIES, INC.
By:
------------------------------------
Title:
--------------------------------
3
<PAGE> 1
EXHIBIT 4.2
<PAGE> 2
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (the "Assumption Agreement") is furnished by
THE MAXIM GROUP, INC., a Delaware corporation ("Maxim"), to IMAGE INDUSTRIES,
INC., a Delaware corporation ("Image"), pursuant to Section 3.1(e) of that
certain Agreement and Plan of Reorganization, dated as of May 31, 1996, between
Maxim, TMG-II Merger, Inc., a Delaware corporation, and Image (the "Agreement").
1. In accordance with the provisions of Section 3.1(e) of the Agreement,
Maxim, for itself, its successors and assigns, hereby assumes all of those
certain obligations of Image under that certain Plan and Agreement of Conversion
(the "Conversion Agreement"), dated July 30, 1993, among Image and certain
optionholders thereof, to the optionholders parties to such Conversion Agreement
(the "Assumed Obligations").
2. The undertakings of Maxim referred to in this Assumption Agreement
shall not in any way limit Maxim's right of recourse as set forth in the
Agreement for any breach of the covenants, representations or warranties of
Image contained therein. The assumption by Maxim of the Assumed Obligations
contained herein shall not enlarge any rights or remedies of any third parties
under any contracts or arrangements with Image. Nothing herein shall prevent
Maxim from contesting with a third party in good faith any of the Assumed
Obligations.
IN WITNESS WHEREOF, Maxim has caused this Assumption Agreement to be
executed and delivered under seal as of the 30th day of August, 1996.
THE MAXIM GROUP, INC.
By: /s/ A. J. Nassar
--------------------------------
A. J. Nassar, President
<PAGE> 1
EXHIBIT 4.3
<PAGE> 2
REPLACEMENT STOCK OPTION AGREEMENT ("OPTION AGREEMENT") DATED AS OF
AUGUST 29, 1996, BETWEEN THE MAXIM GROUP, INC., A DELAWARE CORPORATION
(THE "COMPANY"), AND ____________________ ("OPTION HOLDER")
On this date, the Company has acquired Image Industries, Inc. ("Image")
pursuant to that certain Agreement and Plan of Reorganization, dated as of May
31, 1996, by and among the Company, TMG-II Merger Inc. and Image (the "Merger
Agreement"). Pursuant to the terms of Section 3.1(e) of the Merger Agreement, on
the effective date of the acquisition of Image, each holder of outstanding
options to acquire shares of Common Stock of Image shall receive in exchange
therefor a corresponding option to purchase shares of Common Stock of the
Company having the same aggregate exercise price, terms, duration and vesting
schedule, exercisable for shares of Common Stock of the Company rather than
shares of common stock of Image. Accordingly, the Company has granted to the
Option Holder the nonqualified stock option(s) hereinafter described pursuant to
this Option Agreement, in replacement of that certain Replacement Stock Option
Agreement dated as of August 10, 1993 by and between Image and the Option
Holder.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto hereby
agree as follows:
1. Subject to all of the terms of that certain Plan and Agreement of
Conversion (the "Plan") entered into as of the 30th day of July, 1993, by and
among Image and Option Holder and assumed by the Company on this date
(hereinafter the "Effective Date"), the Company hereby grants to the Option
Holder, as a matter of separate agreement and not in lieu of salary or any other
compensation for services, the right and option to purchase all or any part of
________ shares of the Company's common stock, $.001 par value per share (the
"Common Stock"), on the terms and conditions herein set forth (the "Option").
2. The purchase price of the shares of Common Stock subject to the
Option shall be $.01 per share.
3. Subject to the provisions of paragraph 5 of this Option Agreement,
the Option shall be exercisable in whole at any time or in part from time to
time after the date hereof and during the term of the Option as to all or any of
the shares of Common Stock then available for purchase under the Option, but not
as to less than 50 shares (or the shares then purchasable under the Option if
less than 50 shares) at any one time. Subject to paragraph 4, the term of the
Option shall begin on the date hereof and shall expire on March 30, 2006. The
Option Holder shall have none of the rights of a shareholder with respect to the
shares of Common Stock subject to the Option until such shares shall have been
transferred to the Option Holder upon the exercise of the Option in accordance
herewith and with the terms of the Plan.
4. Subject to the rights of the Company under Section 4 of the Plan, the
Option shall not be transferable by the Option Holder otherwise than by will or
the laws of descent and distribution, and the Option is exercisable, during the
Option Holder's lifetime, only by the Option Holder. The designation of a
beneficiary by an Option Holder shall not constitute a transfer. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as aforesaid), pledged or encumbered in
any way, unless in favor of the Company (whether by operation
<PAGE> 3
of law or otherwise), and shall not be subject to execution, attachment or
similar process, except by the Company. In the event of any attempted
assignment, transfer, pledge, encumbrance or other disposition of the Option
contrary to the provisions hereof, or the levy of any attachment or similar
process upon the Option, the Option and any such attempted assignment, transfer,
pledge, encumbrance or disposition shall be null and void and of no further
effect. The Option Holder further covenants and agrees that (i) the shares of
Common Stock underlying the Option (to the extent not exercised) shall be
subject to each of the restrictions set forth in this paragraph above, and (ii)
he shall not enter into any agreement whatsoever prohibiting or restricting the
pledge of the shares of Common Stock issuable upon exercise of the Option to the
Company to secure the loan described in Section 4 of the Plan (the "Loan"), and
in the event the Option Holder breaches this provision and enters into any such
agreement, the Company will have no obligation to make the Loan to the Option
Holder.
5. If the Option Holder shall die, the Option may be exercised in full
for the aggregate number of shares of Common Stock covered thereby by the
legatee or legatees of the Option under the Option Holder's last will, or by the
personal representatives or distributees of the estate of the Option Holder,
during the term of the Option as defined by and subject to the provisions of
paragraph 3, above.
6. If all or any portion of the Option is exercised subsequent to any
stock dividend, stock split, recapitalization, combination, exchange of shares,
merger, consolidation, liquidation, split-up, split-off, spin-off or other
similar change in capitalization, any distribution to common shareholders,
including a rights offering, other than cash dividends, or any like change, the
Board of Directors of the Company (the "Board") or the Stock Option Committee
established by the Board (the "Committee") shall make such appropriate
adjustments in the purchase price paid upon exercise of the Option and the
aggregate number and class of shares of Common Stock or other securities or
property issuable upon any such exercise as the Board or Committee shall, in its
sole discretion, determine. In any such event, no fractional share shall be
issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued; further,
the minimum number of full shares of Common Stock which may be purchased upon
any such exercise shall be the minimum number specified in paragraph 3 adjusted
proportionately.
7. Payment of the purchase price of the shares of Common Stock subject
to the Option shall be made in cash or in whole shares of Common Stock already
owned by the Option Holder or partly in cash and partly in such Common Stock.
Subject to the terms and conditions of this Option Agreement, the Option may be
exercised by written notice to the Company at its principal office, attention of
the Secretary. Such notice shall (a) state the election to exercise the Option,
the number of shares of Common Stock in respect of which it is being exercised
and the manner of payment for such shares and (b) be signed by the person or
persons so exercising the Option and, in the event the Option is being exercised
pursuant to paragraph 5 by any person or persons other than the Option Holder,
accompanied by appropriate proof of the right of such person or persons to
exercise the Option. Such notice shall either (i) be accompanied by payment of
the full purchase price of such shares of Common Stock, in which event the
Company shall issue and deliver a certificate or certificates representing such
shares as soon as practicable after the notice is received, or (ii) fix a date
(not more than 10 business days from the date of such notice) for the payment of
the full purchase price of such shares at the Company's principal office,
against delivery of a certificate or certificates representing such shares. Cash
payments of such purchase price shall, in either case, be made by cash or
certified check payable to the order of the Company. Common Stock payments
(valued at Market Price, as defined below, on the date of exercise) shall be
made by delivery of stock certificates in negotiable form either duly endorsed
in blank for transfer or accompanied by a duly executed stock power. All cash
and Common Stock payments
2
<PAGE> 4
shall, in either case, be delivered to the Company at its principal office,
attention of the Secretary. If certificates representing Common Stock are used
to pay all or part of the purchase price of the Option, a separate certificate
shall be delivered by the Company representing the same number of shares as each
certificate so used, and an additional certificate shall be delivered
representing the additional shares to which the holder of the Option is entitled
as a result of the exercise of the Option. The certificate or certificates for
the shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option and
shall be delivered as aforesaid to or upon the written order of the person or
persons exercising the Option. All shares issued as provided herein will be
fully paid and nonassessable.
For purposes hereof, the term "Market Price" shall mean at any date, the
mean between the high and low sales prices of a share of Common Stock on the
NYSE Composite Tape or, if the Common Stock is not listed or admitted to trading
on the NYSE, the mean between the high and low sales prices of a share of Common
Stock on the principal national securities exchange on which the Common Stock is
listed, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the mean between the high and low sales prices of
a share of Common Stock in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ"), or, if the Common Stock is not reported by NASDAQ, the mean between
the high and low sales prices of a share of Common Stock as reported by the
National Quotation Bureau Incorporated, or, in all other cases, the value set in
good faith by the Committee.
8. The Option Holder hereby agrees to provide the Company no less than
fifteen (15) days prior written notice of his or her intent to exercise the
Option and to repay the Company the amount of Withholding Tax upon exercise, or
at such earlier time as the Option may be determined to be taxable to the Option
Holder, as set forth in the Plan. The Company shall have the right to retain or
sell without notice, or to demand surrender of, shares of Common Stock in value
sufficient to cover any Withholding Tax (that is, any tax including any Federal,
State or local income tax, required by any governmental entity to be withheld or
otherwise deducted and paid with respect to the Option), and to make payment (or
to reimburse itself for payment made) to the appropriate taxing authority of an
amount in cash equal to the amount of such Withholding Tax, remitting any
balance to the Option Holder. For purposes of this paragraph, the value of
shares of Common Stock so retained, sold or surrendered shall be determined by
the Committee and shall not be less than Market Price on the date that the
amount of the Withholding Tax is to be determined (the "Tax Date"), and the
value of shares of Common Stock so retained or sold shall be the actual net sale
price per share (after deduction of commissions) received by the Company.
Notwithstanding the foregoing, the person exercising the Option shall be
entitled to satisfy the obligation to pay any Withholding Tax, in whole or in
part, by providing the Company with funds sufficient to enable the Company to
pay such Withholding Tax or by requiring the Company to retain or to accept upon
delivery thereof by the Option Holder shares of Common Stock sufficient in value
(determined in accordance with the last sentence of the preceding paragraph) to
cover the amount of such Withholding Tax. Each such election to have shares
retained or to deliver shares for this purpose shall be subject to the following
restrictions: (i) the election must be in writing and made on or prior to the
Tax Date; and (ii) if the person exercising the Option is subject to Section 16
of the Securities Exchange Act of 1934, the election to have shares retained to
satisfy the Withholding Tax must either (a) be an irrevocable election made
after the Effective Date and at least six months prior to the Tax Date or (b)
take effect, or with respect to elections made prior to the Effective Date, be
made, during the ten business day "window period" beginning on the third
business day following the date on which the Company releases
3
<PAGE> 5
for publication its annual or quarterly financial statements and ending on the
twelfth business day following the date of release thereof.
9. The Company shall at all times during the term of the Option reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Option Agreement, shall pay all fees and
expenses necessarily incurred by the Company in connection with the issue of
shares pursuant hereto and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the Company,
shall be applicable thereto.
10. As used herein, the term "Common Stock" shall, except as otherwise
indicated by the context, mean the Common Stock, par value $.001 per share, of
the Company as authorized on the date hereof.
11. This Option Agreement has been entered into pursuant to and shall
be governed by the laws of the State of Georgia.
12. This Agreement supersedes all prior discussions and agreements
between the Company, Image and the Option Holder with respect to all matters
contained herein, including that certain Replacement Stock Option Agreement
dated August 10, 1993 by and between Image and the Option Holder. This Agreement
constitutes the sole and entire agreement with respect thereto, and any
representation, inducement, promise or agreement, whether oral or written,
between the Company or Image, or any of their respective Officers, employees, or
agents, and Option Holder which is not embodied herein shall be of no force or
effect.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
duly executed by its officer thereunder duly authorized, and the Option Holder
has hereunto set his or her hand and seal, all as of the day and year first
above written.
COMPANY
THE MAXIM GROUP, INC.
By:
---------------------------------------------
A.J. Nassar, President
OPTION HOLDER
By: H. Stanley Padgett as Attorney-in-Fact
for Option Holder pursuant to Special Power of
Attorney attached hereto as Appendix A
------------------------------------------------
H. Stanley Padgett
4
<PAGE> 1
EXHIBIT 5.1
<PAGE> 2
January 10, 1997
Board of Directors
The Maxim Group, Inc.
1035 Cobb Industrial Drive, NE
Marietta, Georgia 30062
RE: The Maxim Group, Inc.
Registration Statement on Form S-8
932,615 Shares of $.001 par value
Common Stock
Replacement Stock Option Plan
Gentlemen:
We have acted as counsel for The Maxim Group, Inc. (the "Company") in
connection with the registration, pursuant to a Registration Statement on Form
S-8 (the "Registration Statement") to be filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, covering the
Shares of 932,615 shares of its $.001 par value Common Stock (the "Shares")
reserved pursuant to the Company's assumption of that certain Plan and Agreement
of Conversion dated July 30, 1993 of the Company's wholly-owned subsidiary,
Image Industries, Inc.
In connection therewith, we have examined the following:
(1) The Certificate of Incorporation of the Company, certified by
the Secretary of State of the State of Delaware;
(2) The By-Laws of the Company, certified as complete and correct
by the Secretary of the Company;
(3) The minute book of the Company, certified as correct and
complete by the Secretary of the Company;
(4) Certificate of Good Standing with respect to the Company,
issued by the Secretary of State of the State of Delaware; and
(5) The Registration Statement, including all exhibits thereto.
<PAGE> 3
Board of Directors
The Maxim Group, Inc.
January 10, 1997
Page Two
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that:
(A) The Company has been duly incorporated under the laws of the
State of Delaware and is validly existing and in good standing
under the laws of that state.
(B) The Shares covered by the Registration Statement have been
legally authorized and when issued in accordance with the
terms described in said Registration Statement, will be
validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
aforementioned Registration Statement on Form S-8 and to the reference to this
firm under the caption "Legal Matters" in the Prospectus. In giving this
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Sincerely,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Robert T. Molinet
-------------------------------------
Robert T. Molinet
RTM/dkaw
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated April 19, 1996
included in The Maxim Group, Inc.'s Transition Report on Form 10-K for the ten
months ended January 31, 1996 and our report dated October 2, 1996 included in
The Maxim Group, Inc.'s Amendment No. 1 on Form 10-K/A dated October 15, 1996 to
its Transition Report on Form 10-K for the ten months ended January 31, 1996 and
to all references to our firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 13, 1997
<PAGE> 1
EXHIBIT 23.2
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Maxim Group, Inc.
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Atlanta, Georgia
January 10, 1997
