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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) August 9, 1998
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The Maxim Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-13099 58-2060334
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
210 TownPark Drive, Kennesaw, Georgia 30144
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 590-9369
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Not applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective August 9, 1998, The Maxim Group, Inc. (the
"Company") acquired substantially all of the residential retail store assets of
Shaw Industries, Inc. and its wholly owned subsidiary, Shaw Carpet Showplace,
Inc.(collectively, "Shaw"), pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of June 23, 1998. These assets include 266 retail
stores with annual revenues of approximately $584 million and are being operated
through the Company's newly organized Maxim Retail Stores, Inc. subsidiary. The
Company intends to continue operating the residential retail store assets of
Shaw ("Shaw Retail") as retail floorcovering stores.
Under the terms of the Merger Agreement, the Company issued to
Shaw 3,150,000 shares of common stock of the Company and a one year note in the
principal amount of $18 million and paid Shaw $25 million in cash. The
transaction price was determined through arms-length negotiations between the
Company and Shaw. The Company has obtained a fairness opinion from its financial
adviser, The Robinson-Humphrey Company, LLC, which states that, from a financial
point of view, the consideration to be paid by the Company in the transaction is
fair to the Company. The cash portion of the merger consideration was funded
from borrowings under the Company's senior credit facility, which was amended on
August 7, 1998. See "Item 5. Other Events."
ITEM 5. OTHER EVENTS
Amendment to Credit Facility. On August 7, 1998, the Company
amended its senior credit facility to, among other things, increase the
revolving portion of the senior credit facility to $110 million, subject to
certain borrowing base limitations. The senior credit facility, as amended,
expires on October 6, 1998. It is the Company's intention, prior to such
expiration date, to enter into a new senior credit facility with NationsBank,
N.A. (and possibly certain other financial institutions) to replace the current
senior credit facility.
Management. On July 7, 1998, the Company elected Gary
Brugliera as Executive Vice President, Chief Financial Officer and Secretary of
the Company. Mr. Brugliera, age 43, served as Chief Financial Officer of Upton's
Department Stores, Inc. from 1987 to June 1998.
On July 7, 1998, the Company also elected David E. Cicchinelli
as Chief Operating Officer of the Company, replacing Herb Biggers. Mr.
Cicchinelli had previously served as Senior Executive Vice President of the
Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired:
At the present time, it is impractical to provide the required
financial statements for Shaw Retail as required by this Item 7 of Form 8-K. The
Company will file such required financial statements under cover of Form 8-K/A
as soon as practicable, but not later than October 23, 1998 (60 days after this
Report is required to be filed).
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(b) Pro Forma Financial Information:
At the present time, it is impractical to provide the pro
forma financial information relative to the Shaw Retail acquisition as required
by Article 11 of Regulation S-X and this Item 7 of Form 8-K. The Company will
file such pro forma financial information under cover of Form 8-K/A as soon as
practicable, but not later than October 23, 1998 (60 days after this Report is
required to be filed).
(c) Exhibits:
2.1 Agreement and Plan of Merger, dated as of June 23,
1998, between The Maxim Group, Inc., CMAX
Acquisition, Inc., Shaw Industries, Inc. and Shaw
Carpet Showplace, Inc. (incorporated by reference
from the Company's Current Report on Form 8-K dated
June 23, 1998).
2.1.1 Amendment, dated August 9, 1998, to Agreement and
Plan of Merger, dated as of June 23, 1998, between
The Maxim Group, Inc., CMAX Acquisition, Inc., Shaw
Industries, Inc. and Shaw Carpet Showplace, Inc.
10.23.2 Second Amendment, Waiver and Consent Agreement, dated
as of April 9, 1998, among the Company, certain of
its subsidiaries, First Union National Bank, as
administrative agent, NationsBank, N.A., as
documentation agent, and Fleet National Bank, as
co-agent, regarding senior credit facility.
10.23.3 Third Amendment to Credit Agreement, dated as of
August 7, 1998, among the Company, certain of its
subsidiaries, and NationsBank, N.A., as
administrative agent for the Lenders, regarding
senior credit facility.
10.24 Subordinated Promissory Note, dated August 9, 1998,
from the Company to Shaw Industries, Inc. in the
principal amount of $18,048,000.
10.25 Shareholder's Agreement, dated as of August 9, 1998,
by and between the Company and Shaw Industries, Inc.
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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 hereunto duly authorized.
THE MAXIM GROUP, INC.
By: /s/ Thomas P. Leahey
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Thomas P. Leahey
Executive Vice President, Finance
Dated: August 9, 1998
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EXHIBIT INDEX
Exhibit No Description of Exhibit
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2.1.1 Amendment, dated August 9, 1998, to Agreement and Plan
of Merger, dated as of June 23, 1998, between The Maxim
Group, Inc., CMAX Acquisition, Inc., Shaw Industries,
Inc. and Shaw Carpet Showplace, Inc.
10.23.2 Second Amendment, Waiver and Consent Agreement, dated as
of April 9, 1998, among the Company, certain of its
subsidiaries, First Union National Bank, as
administrative agent, NationsBank, N.A., as
documentation agent, and Fleet National Bank, as
co-agent, regarding senior credit facility.
10.23.3 Third Amendment to Credit Agreement, dated as of August
7, 1998, among the Company, certain of its subsidiaries,
and NationsBank, N.A., as administrative agent for the
Lenders, regarding senior credit facility.
10.24 Subordinated Promissory Note, dated August 9, 1998, from
the Company to Shaw Industries, Inc. in the principal
amount of $18,048,000.
10.25 Shareholder's Agreement, dated as of August 9, 1998, by
and between the Company and Shaw Industries, Inc.
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EXHIBIT 2.1.1
THE MAXIM GROUP, INC.
210 TownPark Drive
Kennesaw, Georgia 30144
August 9, 1998
Shaw Industries, Inc.
616 East Walnut Avenue
Dalton, Georgia 30720
Attn: Chairman
Re: Agreement and Plan of Merger, dated June 23, 1998 (the
"Merger Agreement"), among Shaw Industries, Inc., Shaw
Carpet Showplace, Inc., CMAX Acquisition, Inc. and The
Maxim Group, Inc.
Ladies and Gentlemen:
This letter will serve as an amendment and modification by the
Company, Target1, the Subsidiary and Parent to the Merger Agreement. From and
after the date hereof, the Merger Agreement shall be deemed to mean the Merger
Agreement, as amended hereby. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
A. The parties hereto hereby agree to amend and modify the
Merger Agreement as follows:
1. Section 2.1 of Article II of the Merger Agreement is
hereby amended by deleting therefrom the phrase "the Subsidiary" and inserting
in lieu thereof the phrase "Target1".
2. Section 3.2(b)(i) of Article III of the Merger Agreement
is hereby amended by deleting therefrom the reference to the phrase "Target 3".
3. Section 3.2(b)(ii) of Article III of the Merger
Agreement is hereby deleted in its entirety and the following is inserted in
lieu thereof:
(ii) (A) Within thirty (30) days after the Closing Date,
the Company shall deliver to Parent a final balance
sheet related to the retail stores listed on Schedule
6.13, which final balance sheet (x) shall reflect the
net book value of the consolidated assets and Accrued
Liabilities (as hereinafter defined) of Target as of the
Effective Time in accordance with generally accepted
accounting principles consistently applied ("GAAP")
following the transfers contemplated by Section 6.13
hereof and (y) shall be in substantially the same form
as the Opening Balance Sheet (the "Closing Balance
Sheet"). Parent and its representatives may participate
in the preparation of the Closing Balance Sheet.
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(B) As soon as practicable after the Closing Date
and in any event within sixty (60) days thereafter, the
Company shall cause Arthur Andersen LLP, the independent
public accountants of the Company, to review the Closing
Balance Sheet pursuant to the procedures set forth in the
engagement letter, dated July 22, 1998, from Arthur
Andersen LLP to, and accepted by, the Company and Parent,
with such changes to such procedures (i) as may be approved
by Company and Parent from time to time, or (ii) as may be
separately requested by either of Company or Parent,
provided, that in the event either Company or Parent
separately requests changes to such procedures and such
changes are not approved by the other party then the
additional costs incurred as a result of such request, if
any, shall be the sole responsibility of the requesting
party (the "Engagement Letter"); provided, however, that
the net book value of goodwill shall be valued for all
purposes under this Agreement at the value reflected in the
Opening Balance Sheet. Any adjustments made by Arthur
Andersen LLP following its review of the Closing Balance
Sheet pursuant to the procedures set forth in the
Engagement Letter shall be set forth in a report provided
to each of the Company and Parent (the Closing Balance
Sheet as adjusted by such report being hereinafter referred
to as the "Post-Closing Report"). The Post-Closing Report
shall be submitted to each of Parent and the Company for
their approval, which shall not be unreasonably withheld,
within 20 days following submission by the accountants.
Other than as provided above, Parent and the Company shall
each bear one-half of the costs incurred in connection with
the preparation of the Post-Closing Report and each of
Parent and Company shall bear their respective expenses
incurred in connection with their review of the Post-
Closing Report.
4. Section 3.2(b) of Article III of the Merger Agreement is
hereby further amended by adding the following new subsection (v) thereto:
(v) The Company hereby agrees that Parent and Target shall
bear no responsibility for liabilities that do not relate
to the operation of the retail stores listed on Schedule
6.13, and Company will immediately reimburse Parent and/or
Target, as the case may be, for any of such liabilities
that are paid by Parent and/or Target after the Effective
Time. The Company and Parent hereby further agree that
those certain liabilities described on Exhibit "D" that
relate to the operation of the retail stores listed on
Schedule 6.13 will be accrued on the Closing Balance Sheet
in accordance with GAAP (the "Accrued Liabilities"), and
the same will be subject to adjustment pursuant to the
Post-Closing Report (such Accrued Liabilities, as so
adjusted being hereinafter referred to as the "Final
Accrued Liabilities"). Parent agrees to pay, or to cause
Target to pay, all of the payables relating to the
operation of the retail stores listed on Schedule 6.13;
provided, that the Company hereby agrees to reimburse
Parent and/or Target, as the case may be, immediately for
any and all payables that relate to the operation of the
retail stores listed on Schedule 6.13 prior to the Closing
Date (the "Pre-Closing Payables"), except for the Final
Accrued Liabilities, for which no reimbursement will be
owed unless the Parent's or Target's
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payment exceeds the amount reserved in the Closing Balance
Sheet, as adjusted pursuant to the Post-Closing Report, in
which event Company will reimburse Parent and/or Target,
as the case may be, immediately for any payments made in
excess of such reserve. If and to the extent that trade
payable invoices rendered by third party vendors include
Pre-Closing Payables and non-Pre-Closing Payables, the
same shall be appropriately segregated by the Company and
Parent. Utility bills and similar expenses that cannot be
readily segregated shall be prorated on a per diem basis
with the Pre-Closing Payables to include the prorated
share that is allocated to periods that are prior to the
Closing Date.
5. Section 4.1(a) of Article IV of the Merger Agreement is
hereby amended by deleting therefrom the reference to the phrase and
parenthetical "Shaw Retail Properties, Inc. ("Target3")."
6. Section 4.1(a) of Article IV of the Merger Agreement is
hereby further amended by deleting therefrom any and all references to the
phrase "Target3."
7. Section 4.1(e) of Article IV of the Merger Agreement is
hereby amended by deleting subsection (iii) thereof in its entirety and
inserting the following in lieu thereof: "(iii) [Intentionally Reserved]."
8. Section 6.10 of Article VI of the Merger Agreement is
hereby amended by deleting therefrom both references to the word
"Administrative" and inserting in lieu thereof the word "Transition".
9. Section 7.4(b) of Article VII of the Merger Agreement is
hereby amended by deleting therefrom the reference to "Indemnitor" appearing in
the second line thereof and inserting in lieu thereof a reference to
"Indemnitee".
10. The Merger Agreement is hereby amended by adding thereto a
new Exhibit "D", which Exhibit "D" shall be in the form attached hereto.
11. Section 7.2 of Article VII of the Merger Agreement is
hereby amended by (i) deleting the period at the end of subsection (e) and
substituting a semicolon followed by the term "or" in lieu thereof, and (ii)
adding the following new subsection (f) to the end thereof:
(f) Any litigation matters disclosed in Schedule 4.9 of
the Merger Agreement or any litigation pending or
threatened against the Company, a Target, a predecessor in
interest or any of their respective affiliates at or prior
to the Effective Time whether or not disclosed to Parent
at or prior to Closing arising out of events occurring
before the Effective Time.
12. Section 7.7 of Article VII of the Merger Agreement is
hereby amended by adding the term "or Section 7.2(f)" (i) to the end of
subsection (a) of Section 7.7, and (ii) immediately after the reference to
Section 7.2(b) appearing in subsection (c) of Section 7.7.
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13. The Schedules to the Merger Agreement are hereby amended
by deleting therefrom Schedule 6.13 in its entirety and inserting in lieu
thereof the replacement Schedule 6.13 attached hereto.
B. The Company agrees that it will provide, at the request of
Parent or any other Indemnitee, an assurance letter to third parties, in form
and substance reasonably acceptable to such third parties, indicating that such
litigation matters (or any future litigation matters for which the Company is
providing indemnification under Article VII of the Merger Agreement) are not in
any way the responsibility or liability of Parent or any other Indemnitee and
are the sole responsibility of the Company.
C. The Company hereby represents and warrants to Parent that
all the transfers contemplated by Section 6.13 of the Merger Agreement are
complete and all liabilities of Target, other than liabilities related to the
operation of the retail stores listed on Schedule 6.13 specifically assumed by
Parent pursuant to the Merger Agreement, have been transferred from Target to
the Company or another entity controlled by the Company.
Please evidence your acceptance of and agreement to the
above-listed amendments by executing this letter agreement in the space provided
for below.
By signing below, each party hereto represents and warrants
that all representations, warranties, covenants and agreements made by such
party in the Merger Agreement are true, correct and accurate as of the date
hereof and that each such party remains bound thereby.
Sincerely,
THE MAXIM GROUP, INC.
By:/s/ Thomas P. Leahey
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Thomas P. Leahey, Executive Vice
President - Finance
Agreed to and accepted this 9th
day of August, 1998:
CMAX ACQUISITION, INC. SHAW CARPET SHOWPLACE, INC.
By: /s/ Thomas P. Leahey By:/s/ Bennie M. Laughter
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Thomas P. Leahey, Vice President Bennie M. Laughter, Vice President and
and Treasurer Secretary
SHAW INDUSTRIES, INC.
By: /s/ Bennie M. Laughter
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Bennie M. Laughter, Vice President
and Secretary
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EXHIBIT 10.23.2
SECOND AMENDMENT, WAIVER AND CONSENT AGREEMENT
This SECOND AMENDMENT, WAIVER AND CONSENT AGREEMENT (this
"Agreement"), is dated as of April 9, 1998, by and among The Maxim Group, Inc.,
("Maxim"), certain Subsidiaries of Maxim identified on the signature pages
hereto (together with Maxim, the "Borrowers"), the financial institutions
identified on the signature pages hereto as lenders (the "Lenders"), First Union
National Bank ("First Union"), as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), NationsBank, N.A., as documentation agent
(the "Documentation Agent"), and Fleet National Bank, as co-agent (the
"Co-Agent").
RECITALS
WHEREAS, the Borrowers, the Lenders, the Administrative Agent,
the Documentation Agent and the Co-Agent are parties to that certain Credit
Agreement dated as of August 26, 1997, as amended by that certain letter
agreement dated as of September 24, 1997 (as so amended, the "Credit
Agreement");
WHEREAS, the Borrowers desire to enter into that certain
Guaranty Agreement dated as of the date hereof (the "Guaranty"), pursuant to
which they will, jointly and severally, unconditionally guarantee the
obligations of First Security Bank, National Association, as trustee (the
"Owner-Trustee"), under that certain (i) promissory note dated as of the date
hereof (the "Bridge Note") issued by the Owner-Trustee and First Union, in its
capacity as co-trustee under that certain Trust Agreement (as defined in Section
3 below), to First Union in the principal face amount of $12,610,000, and (ii)
the Certificate dated as of the date hereof (the "Certificate") issued by the
Owner-Trustee to First Union in the principal face amount of $390,000;
WHEREAS, THE Borrower desires to enter into that certain (a)
Agency Agreement dated as of the date hereof (the "Agency Agreement") with the
Owner-Trustee, pursuant to which Maxim will act as agent for the Owner-Trustee
in connection with certain matters; (b) the Indemnification Agreement dated as
of the date hereof (the "Indemnification Agreement"; the Guaranty, the Bridge
Note, the Certificate, the Agency Agreement and the Indemnification Agreement
are referred to herein collectively as the "Bridge Loan Documents") with the
Owner-Trustee and First Union, pursuant to which, among other things, Maxim
will indemnify First Union, the Owner-Trustee and certain other Persons
identified therein from certain costs, expenses and liabilities;
WHEREAS, all of the obligations of the Borrowers under the
Guaranty will be secured by, among other things, (a) the Collateral (as such
term is defined in the Security Agreement), as provided in that certain First
Amendment to Security Agreement (the "Security Agreement Amendment") dated as of
the date hereof, and (b) an assignment by Maxim to First Union of all of Maxim's
rights under the Guaranty, the Agency Agreement and the Indemnification
Agreement, in each case, as provided for in the Indemnification Agreement
(together with any assignment of Maxim's rights under any leases of real
property entered into between the Owner-Trustee, as lessor, and Maxim, as
lessee, referred to herein collectively as the "Assignment"); and
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WHEREAS, the Borrowers have jointly and severally requested
(i) the written approval of the Lenders to the execution, delivery and
performance by Maxim and each of the other Borrowers of each of the Bridge Loan
Documents to which they are party, including, without limitation, (A) the
Contingent Obligations incurred by the Borrowers under the Guaranty, and (B) the
Assignment, (ii) the amendment of the Credit Agreement as set forth in Section 2
hereof to, (iii) the amendment of the Security Agreement pursuant to the terms
of the Security Agreement Amendment, (iv) a waiver of enforcement of Section
7.12 of the Credit Agreement with respect to (A) the failure of the Borrowers to
cause CarpetMAX of Jacksonville, Inc., a Georgia corporation and a newly created
wholly-owned Subsidiary of Maxim (the "New Subsidiary"), to timely execute and
deliver to the Administrative Agent a Joinder Agreement and a supplement to the
Security Agreement upon the creation thereof, and (B) the failure of Maxim to
timely execute and deliver a supplement to the Pledge Agreement in favor of the
Administrative Agent for the benefit of the Lenders with respect to the shares
of the New Subsidiary owned by it, and (v) a waiver of enforcement of Section
4(a)(ii) of the Security Agreement and Section 10.1(e) of the Credit Agreement
with respect to the failure of the Borrowers to timely notify the Administrative
Agent of the change in the name of the Subsidiary Borrowers identified on
Schedule 1 attached hereto and made a part hereof.
NOW, THEREFORE, in consideration of the premises and the
agreements, covenants and provisions herein contained, for Ten Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. General. Subject to the satisfaction in full of each of the
conditions set forth in Section 5 hereof, upon and after the date hereof, all
references to the Credit Agreement in that document or in any other Loan
Document shall mean the Credit Agreement as amended hereby. Except as expressly
provided herein, the execution and delivery of this Agreement does not and will
not amend, modify or supplement any provision of, or constitute a consent to or
a waiver of any noncompliance with the provisions of, the Credit Agreement, and,
except as specifically provided in this Agreement, the Credit Agreement shall
remain in full force and effect and is hereby ratified and confirmed.
2. Amendments. Subject to the satisfaction in full of each of
the conditions set forth in Section 5 hereof, the Credit Agreement is hereby
amended as follows:
(a) Section 1.1 of the Credit Agreement is amended by
adding (in alphabetical order) the following new defined terms
to read in their entirety as follows:
"Borrowing Request Notice" shall have the meaning assigned
thereto in Section 2.13.
"Bridge Note" means that certain promissory note dated as
of April 9, 1998 issued by the Owner-Trustee and First
Union, acting in its capacity as co-trustee under the Trust
Agreement, to First Union in the principal face amount of
$12,610,000.
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"Certificate" means that certain Certificate dated as of
April 9, 1998 issued by the Owner-Trustee to First Union in
the principal face amount of $390,000.
"Guaranty" means the Guaranty Agreement dated as of April
9, 1998 by the Borrowers in favor of First Union, pursuant
to which each of the Borrowers has jointly and severally
guaranteed the payment obligations of the Owner-Trustee
under the Bridge Note and the Certificate.
"Guaranty Reserve" means, at any time, an amount equal to
the lesser of (a) $13,000,000, and (b) the sum of (i) the
outstanding principal under the Bridge Note, together with
all accrued and unpaid interest and fees thereon, and all
other amounts then due and payable in respect of the Bridge
Note, plus (ii) the outstanding principal amount under the
Certificate, together with all accrued and unpaid yield and
fees thereon, and all other amounts then due and payable in
respect of the Certificate.
"Guaranty Payment Date" means any date upon which the
principal, interest, fees or other amounts become due and
payable under the Bridge Note or the Certificate.
"Owner-Trustee" means First Security Bank, National
Association, in its capacity as trustee pursuant to that
certain Trust Agreement dated as of April 9, 1998, by and
between First Union and First Security Bank, National
Association, together with its successors and assigns.
(b) Section 1.1 of the Credit Agreement is further amended
by amending and restating the following definitions to read in their
entirety as follows:
"Borrowing Base" means, at any date of determination ,
an amount equal to the lesser of (a) $50,000,000 less the
Guaranty Reserve (except with respect to any request or
deemed request for a Revolver Loan advance pursuant to
Section 2.13 hereof), and (b)(i) for any date of
determination prior to April 30, 1998, an amount equal to
four (4) times Consolidated EBITDAR, for the period of four
consecutive fiscal quarters then most recently ended, less
an amount equal to Consolidated Senior Debt at such date,
plus an amount equal to Debt outstanding under the Revolver
Facility at such date, less the Guaranty Reserve (except
with respect to any request or deemed request for a
Revolver Loan advance pursuant to Section 2.13 hereof), and
(ii) for any date of
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determination on or after April 30, 1998, an amount equal
to three and three quarters (3.75) times Consolidated
EBITDAR, for the period of four consecutive fiscal quarters
then most recently ended, less an amount equal to
Consolidated Senior Debt at such date, plus an amount equal
to Debt outstanding under the Revolver Facility at such
date, less the Guaranty Reserve.
"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, (c) all payment and
other obligations of Maxim and the other Borrowers under or
in respect of the Guaranty, and (d) all other fees and
commissions (including attorney's fees), charges,
indebtedness, loans, liabilities, financial accommodations,
obligations (including, without limitation, the obligations
of Borrowers under the Reimbursement Agreement and the
reimbursement obligations of Borrowers under any and all
Letters of Credit), 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.
(c) Section 1.1 of the Credit Agreement is further
amended by: deleting the word "and" immediately preceding clause
(g) of the definition of "Permitted Liens"; by deleting the period
appearing at the end of clause (g) of the definition of "Permitted
Liens"; and by adding a new clause (h) to the end of the
definition of "Permitted Liens" to read in its entirety as
follows:
and, (h) Liens in favor of the Administrative Agent to
secure the joint and several payment obligations of the
Borrowers in respect of the Guaranty.
(d) Section 2.1 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
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
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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
less (x) the aggregate principal amount of Swingline Loans
outstanding, and less (y) the aggregate Conventional LOC
Obligations, or (B) fifty million dollars ($50,000,000) less (x)
the aggregate principal amount of Swingline Loans outstanding,
less (y) the aggregate Conventional LOC Obligations, and less the
Guaranty Reserve (except with respect to any request or deemed
request for a Revolver Loan advance pursuant to Section 2.13
hereof), and (ii) the aggregate 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. Subject to the terms and
conditions hereof, the Borrowers may borrow, repay and reborrow
Revolver Loans hereunder until the Revolver Facility Termination
Date.
(e) Article II of the Credit Agreement is hereby amended by adding
a new Section 2.13 thereto at the end thereof to read in its entirety as
follows:
2.13 Repayment of Guaranty with Revolver Loans. First Union
will promptly give notice to Maxim, on behalf of the Borrowers, of any
failure by the Owner-Trustee to pay any principal, interest, yield, fees
or other amounts then due and owing under the Bridge Note or the
Certificate on any Guaranty Payment Date. Unless Maxim, on behalf of the
Borrowers, shall cause First Union, for its own account, to be reimbursed
for such failure to timely pay other than from the proceeds of Revolver
Loans by no later than 11:00 a.m. (Charlotte time) on the day next
succeeding any Guaranty Payment Date, the Borrowers shall request or be
deemed to have requested a Revolver Loan advance (in an amount not to
exceed the Guaranty Reserve) to be used to pay the
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principal, interest, yield, fees and other amounts then due and owing to
First Union under the Bridge Note and the Certificate, and the
Administrative Agent shall promptly (and in any event by not later than
2:00 p.m. (Charlotte time)) give notice ("Borrowing Request Notice") to
the Lenders that a Revolver Loan has been requested or deemed requested
by the Borrowers to be made in connection with the Guaranty, 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 be requested by the Borrowers as provided below. 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 or deemed requested, and the proceeds
thereof shall be paid directly to First Union for application to the
payment of any and all principal, interest, yield, fees and other amounts
then due and owing under the Bridge Note and the Certificate. 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 and in the manner specified in the
preceding sentence on the date that any Borrowing Request Notice is
given, 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;
provided, however, that if 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 that any such Borrowing Request Notice is given,
but adjusted for any payments received from the Borrowers on or after
such date and prior to such purchase) from First Union such participation
in the outstanding principal amount of the Bridge Note and the
Certificate, as shall be necessary to
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<PAGE> 7
cause each such Lender to share in the outstanding principal amount of
the Bridge Note and the Certificate then due and owing, 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, further, that at the time any such
purchase of a participation is actually made, the purchasing Lender shall
be required to pay to First Union, to the extent not paid to First Union
by Maxim, interest and/or yield, as applicable, on the principal amount
of participation purchased for each day from and including the day upon
which such Borrowing Request Notice was given 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.
(f) Section 3.5 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
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 and the Term 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 Obligations 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 Obligations, in that order.
(g) Section 10.1 of the Credit Agreement is amended by adding a new
clause (p) and clause (q) to the end thereof to read in their entirety as
follows:
(p) any "Event of Default" (as such term is defined in the Bridge
Note) by the Owner-Trustee under the Bridge Note.
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<PAGE> 8
(q) any "Event of Default" (as such term is defined in the
Certificate) by the Owner-Trustee under the Certificate.
(h) The forms of the Notice of Borrowing and the Swingline Notice of
Borrowing, Exhibits B1 and B2, respectively, to the Credit Agreement are
hereby amended and restated in their entirety as set forth on Exhibit B1
and Exhibit B2 attached hereto and made a part hereof.
(i) Schedules 5.1(a), 5.1(b) and 5.1(r) to the Credit Agreement are
hereby replaced by new Schedules 5.1(a), 5.1(b) and 5.1(r), respectively,
attached hereto and made a part hereof.
3. Consent and Waiver. Subject to the satisfaction in full of each of the
conditions set forth in Section 5 hereof, the Lenders hereby (a) consent to the
loan by First Union to the Owner-Trustee in the aggregate principal amount of
$12,610,000, as evidenced by the Bridge Note, (b) consent to First Union's
equity contribution to the Maxim Real Estate Trust 1998-1 in the principal
amount of $390,000, as evidenced by the Certificate, and to First Union's
beneficial ownership interest in the trust created pursuant to the Trust
Agreement dated as of the date hereof (the "Trust Agreement") by and between
First Union and the Owner-Trustee, (c) consent to First Union acting in its
capacity as co-trustee under the Trust Agreement, (d) consent to the
unconditional guarantee by Maxim and each of the other Borrowers of the
obligations of the Owner-Trustee under the Bridge Note pursuant to the terms and
provisions of the Guaranty, (e) consent to the execution, delivery and
performance by each of the Borrowers and First Union of each of the Bridge Loan
Documents to which they are a party to, (f) waive any violation of Section 9.2
of the Credit Agreement due to the incurrence by Maxim of the Contingent
Obligations under the Guaranty and the Indemnification Agreement, (g) consent to
the execution, delivery and performance by the Borrowers of the Security
Agreement Amendment, (h) consent to the Assignment and waive any violation of
Section 9.3 of the Credit Agreement arising as a result of the Assignment, (i)
waives enforcement of Section 7.12 of the Credit Agreement with respect to (1)
the failure of the Borrowers to cause the New Subsidiary to timely execute and
deliver to the Administrative Agent a Joinder Agreement and a supplement to the
Security Agreement, and (2) the failure of Maxim to timely execute and deliver a
supplement to the Pledge Agreement in favor of the Administrative Agent for the
benefit of the Lenders, with respect to the shares of the New Subsidiary owned
by it; and (j) waives enforcement of Section 4(a)(ii) of the Security Agreement
and Section 10.1(e) of the Credit Agreement with respect to the failure of the
Borrowers to timely notify the Administrative Agent of the change in the name of
the Subsidiary Borrowers identified on Schedule 1 attached hereto and made a
part hereof.
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<PAGE> 9
4. Representations and Warranties. Each Borrower (including the New
Subsidiary) hereby represents and warrants to the Administrative Agent and the
Lenders as follows:
(a) Authorization of Amendment, Etc. Each Borrower has the right
and power, and has taken all necessary action to authorize it, to
execute, deliver and perform this Agreement in accordance with its terms.
This Agreement has been duly executed and delivered by each Borrower and
is a legal, valid and binding obligation of such Borrower, enforceable
against such Borrower in accordance with its terms.
(b) Compliance of Amendment with Laws, Etc. The execution,
delivery and performance of this Agreement in accordance with its terms
do not and will not, by the passage of time, the giving of notice or
otherwise,
(i) require any governmental approval or violate any
applicable law relating to any Borrower;
(ii) conflict with, result in a breach of or constitute a
default under the articles or certificate of incorporation or
bylaws of any Borrower, any material provisions of any indenture,
agreement or other instrument to which any Borrower is a party or
by which any Borrower or any of its properties may be bound or any
governmental approval relating to any Borrower, or
(iii) result in or require the creation or imposition of any
Lien (other than Permitted Liens) upon or with respect to any
property now owned or hereafter acquired by any Borrower.
(c) Representations in Credit Agreement. After giving effect to
this Agreement, all of the representations set forth in the Credit
Agreement are accurate in all material respects as of the date hereof,
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.
5. Conditions to Effectiveness.
(a) The effectiveness of the amendments, waivers and consents set
forth herein are subject to the Administrative Agent's receipt of each of
the following on the date first set forth above:
(i) counterparts of this Agreement, duly executed and
delivered by the Borrowers (including the New Subsidiary) and the
Lenders;
(ii) counterparts of the Security Agreement Amendment, duly
executed and delivered by the Borrowers (including the New
Subsidiary) and the Administrative Agent;
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<PAGE> 10
(iii) certified copies of all corporate action taken by the
Borrowers (including the New Subsidiary) to authorize the
execution, delivery and performance of this Agreement, the
Security Agreement Amendment and each other certificate, agreement
or other document to be executed by the Borrowers in connection
with this Agreement;
(iv) a favorable opinion of outside counsel to the Borrowers
(including the New Subsidiary) addressed to the Administrative
Agent and Lenders with respect to the Borrowers and such other
Persons, this Agreement, the Guaranty, the Security Agreement
Amendment, the Joinder Agreement (defined below), the Security
Agreement Supplement (defined below), the Stock Pledge Supplement
(defined below), and the transactions contemplated hereby and
thereby, 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;
(v) a Joinder Agreement dated as of the date hereof (the
"Joinder Agreement"), duly executed by the New Subsidiary and
substantially in the form as set forth in Exhibit I to the Credit
Agreement;
(vi) a Security Agreement Supplement dated as of the date
hereof (the "Security Agreement Supplement"), duly executed by the
New Subsidiary and substantially in the form as set forth in Annex
I to the Security Agreement; and
(vii) a Pledge Agreement Supplement dated as of the date
hereof (the "Pledge Agreement Supplement"), duly executed by Maxim
and substantially in the form as set forth in form of Pledge
Agreement Supplement attached to the Pledge Agreement executed by
Maxim in favor of the Administrative Agent.
(b) The continued effectiveness of the waivers set forth in clause
(i) and clause (j) of Section 3 hereof are subject to the satisfaction in
full of the following conditions:
(i) Within ten (10) Business Days after the date hereof, the
Administrative Agent shall have received duly executed UCC-3
financing statements with respect to each of the Borrowers listed
on Schedule 1 hereto, amending the original UCC-1s that were filed
in connection with the closing that occurred on August 26, 1997,
to reflect the name changes of the Borrowers described on Schedule
1 hereto, in each case, in the appropriate form for filing with
the applicable Governmental Authorities; and
(ii) Within ten (10) Business Days after the date hereof, the
Administrative Agent shall have received UCC-1 financing
statements with respect to the New Subsidiary, in each case, duly
executed by an officer of the New Subsidiary and in the
appropriate form for filing with the applicable Governmental
Authorities in order to perfect all of the Liens and security
interests granted by the New Subsidiary in favor of the
Administrative Agent for the benefit of the Lenders pursuant to
the Security Agreement Supplement.
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<PAGE> 11
Without limiting the foregoing, the waivers set forth in clause (h) and clause
(i) of Section 3 hereof will terminate and be of no further force and effect if
Borrowers' fail to satisfy the conditions referred to in clauses (i) and (ii) of
this Section 5(b) within ten (10) Business Days after the date hereof. This
Agreement, including, without limitation Section 5(b) hereof, is not intended to
and shall not be construed as in any way limiting the provisions of clauses (d)
and (e) of Section 7.12 of the Credit Agreement or of clauses (iii) and (x) of
Section 4 of the Security Agreement.
6. Covenants. Each of the Borrowers hereby covenants and agrees that,
on and at all times after the date hereof, for purposes of (a) determining
compliance with the covenants set forth in Article VIII of the Credit Agreement
and Sections 9.1 and 9.2 of the Credit Agreement, and (b) calculating the
Applicable Margin and the Commitment Fee, or any adjustments thereto, in
accordance with Article III of the Credit Agreement, the Contingent Obligations
of Maxim shall be deemed to include (irrespective of whether Maxim or any other
Borrower is obligated to pay all or any portion of such amounts pursuant to the
Guaranty, any other Bridge Loan Document or otherwise), at any date of
determination thereof, the entire amount of principal then outstanding under the
Bridge Note, together with all accrued and unpaid interest and fees thereon, and
all other amounts then due and payable in respect of the Bridge Note, plus (ii)
the entire amount of principal then outstanding under the Certificate, together
with all accrued and unpaid yield and fees thereon, and all other amounts then
due and payable in respect of the Certificate. For the avoidance of doubt, the
parties hereto hereby agree that solely for purposes of calculating the
Commitment Fee under the Credit Agreement (i) the establishment and maintenance
of the Guaranty Reserve, together with any adjustments in the amount of such
reserve made from time to time on and after the date hereof, shall not
constitute usage in respect of the Commitment under the Credit Agreement, and
(II) the amount of the Revolver Loan Commitment shall not be deemed to be
reduced by the amount of the Guaranty Reserve.
7. Release. Each Borrower hereby (a) acknowledges that First Union is a
beneficiary under the Maxim Real Estate Trust 1998-1 formed under the Trust
Agreement (the "Trust"), (b) consents to First Union being appointed, and
acting, as co-trustee under the Trust Agreement, and (c) irrevocably releases,
remises, quitclaims, and forever discharges First Union and First Union's
affiliates, subsidiaries, officers, directors, employees, agents, counsel, and
representatives, together with their predecessors, successors and assigns
(collectively, the "Released Parties") from any and all actions, causes of
action, suits, debts, demands, controversies, damages, judgments, liens, claims,
charges and liabilities whatsoever, in law or in equity or otherwise which arise
out of or relate to any act or failure to act by First Union in its capacity as
co-trustee under the Trust Agreement, including without limitation, any
communications, transactions, dealings, loans to and payments from, services
performed for, or any other relationship with or work performed for or in
connection with the Trust or any beneficiaries thereof, which such Borrower,
directly or indirectly ever had, now has or hereafter may have against the
Released Parties; provided that the release contained in clause (c) of this
Section 7 shall not apply to any actions arising solely
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<PAGE> 12
out of the gross negligence or willful misconduct of First Union acting in its
capacity as co-trustee under the Trust Agreement.
8. Counterparts. This Agreement may be executed by each party to this
Agreement upon a separate copy, and in such case one counterpart of this
Agreement shall consist of enough of such copies to reflect the signature of all
of the parties to this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or its terms to produce or account
for more than one of such counterparts.
9. Section References. The references in this Agreement to any section
are, unless otherwise specified, to such section of this Agreement.
10. Construction. This Agreement is a Loan Document executed pursuant
to the Credit Agreement and shall be construed, administered and applied in
accordance with all of the terms and provisions of the Credit Agreement.
11. Governing Law. This Agreement 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.
12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
[Signatures appear on following pages]
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers hereunder duly authorized
as of the day and year first written above.
[CORPORATE SEAL] THE MAXIM GROUP, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] IMAGE INDUSTRIES, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
----------------------
Title: Assistant Secretary
----------------------
[CORPORATE SEAL] CARPETMAX OF KENTUCKY, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] CARPETMAX OF JACKSONVILLE, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
----------------------
Title: Secretary
----------------------
[Second Amendment, Waiver and Consent Agreement - Signature Page]
<PAGE> 14
[CORPORATE SEAL] CARPETMAX OF UTAH, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] CARPETMAX OF FLORIDA, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] RNA ENTERPRISES, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] GCO, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] DUBOSE CARPETS & FLOORS, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[Second Amendment, Waiver and Consent Agreement - Signature Page]
<PAGE> 15
[CORPORATE SEAL] RUGS N REMNANTS, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] CARPETMAX OF ALABAMA, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] CARPETMAX OF INDIANA, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] CARPETMAX OF NORTH CAROLINA, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[CORPORATE SEAL] INVESTOR MANAGEMENT, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
----------------------
[Second Amendment, Waiver and Consent Agreement - Signature Page]
<PAGE> 16
[CORPORATE SEAL] GCO CARPET OUTLET, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] MAXIM RETAIL GROUP, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] CARPETMAX OF IOWA, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] CARPETMAX, L.P.
By: The Maxim Group, Inc., as
its sole general partner
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] TRI-R OF ORLANDO, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[Second Amendment, Waiver and Consent Agreement - Signature Page]
<PAGE> 17
[CORPORATE SEAL] CARPETMAX OF PALM BEACH, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] CREDITMAX CORP.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] CARPETMAX OF NEW MEXICO, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] CARPETMAX OF CHARLOTTE, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] CLOUD CARPETS, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[Second Amendment, Waiver and Consent Agreement - Signature Page]
<PAGE> 18
[CORPORATE SEAL] CARPETMAX ALABAMA CONTRACT, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] BAILEY & ROBERTS CARPETMAX OF
TENNESSEE, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
[CORPORATE SEAL] MAXIM EQUIPMENT LEASING
COMPANY, INC.
By: /s/ Gene Harper
-----------------------------
Name: Gene Harper
-----------------------
Title: Secretary
-----------------------
FIRST UNION NATIONAL BANK, as
Administrative Agent and Lender
By: /s/ Michael S. Murphy
-----------------------------
Name: Michael S. Murphy
-----------------------
Title: Senior Vice President
-----------------------
[Second Amendment, Waiver and Consent Agreement - Signature Page]
<PAGE> 19
NATIONSBANK, N.A., as Lender and
as Documentation Agent
By: /s/ David H. Dinkins
-----------------------------
Name: David H. Dinkins
-----------------------
Title: Vice President
-----------------------
FLEET NATIONAL BANK, as Lender
and as Co-Agent
By: /s/ Oliver Bennett
-----------------------------
Name: Oliver Bennett
-----------------------
Title: Vice President
-----------------------
SUNTRUST BANK, ATLANTA, as Lender
By: /s/ Bradley J. Strock
-----------------------------
Name: Bradley J. Strock
-----------------------
Title: Assistant Vice President
-----------------------
By: /s/ Kim A. Willis
-----------------------------
Name: Kim A. Willis
-----------------------
Title: Banking Officer
-----------------------
[Second Amendment, Waiver and Consent Agreement - Signature Page]
<PAGE> 1
EXIBIT 10.23.3
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
entered into as of August 7, 1998 among THE MAXIM GROUP, INC., a Delaware
corporation ("Maxim"), certain Subsidiaries of Maxim identified on the signature
pages hereto (together with Maxim, the "Borrowers"), the Lenders party hereto
and NATIONSBANK, N.A., as Administrative Agent for the Lenders (the
"Administrative Agent"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Credit Agreement (as defined
below).
RECITALS
WHEREAS, the Borrowers, the Lenders and the Administrative
Agent entered into that certain Credit Agreement, dated as of August 26, 1997,
as amended by that certain letter agreement dated as of September 24, 1997 and
that certain Second Amendment, Waiver and Consent dated as of April 9, 1998 (as
further amended or modified from time to time, the "Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders amend
certain terms and conditions of the Credit Agreement as more fully described
below; and
WHEREAS, the Lenders have agreed to amend certain terms of the
Credit Agreement, subject to the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
1. Definitions.
(a) Section 1.1 of the Credit Agreement is hereby
amended by adding (in alphabetical order) the following new defined terms to
read as follows:
"Acquired Company" means Shaw Carpet Showplace,
Inc., a Georgia corporation.
"Merger Agreement" means that certain Agreement and
Plan of Merger dated as of June 23, 1998 between Maxim, CMAX Acquisition, Inc.,
Shaw Industries, Inc. and Shaw Carpet Showplace, Inc.
"NationsBank" means NationsBank, N.A., a national
banking association.
<PAGE> 2
(b) The definition of "Administrative Agent" in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Administrative Agent" means NationsBank, N.A. in its capacity
as administrative agent hereunder, and any successor thereto
appointed pursuant to Section 11.9.
(c) The definition of Applicable Margin in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Applicable Margin" means (a) with respect to any LIBOR Rate
Loan, 1.50% and (b) with respect to any Base Rate Loan, 0%.
(d) The definition of "Borrowing Base" in Section 1.1 of the Credit
Agreement is hereby amended by deleting the figure "$50,000,000" that
appears in line 2 of the definition of "Borrowing Base" and replacing it
with "$110,000,000".
(e) The definition of "Bridge Note" in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"Bridge Note" means that certain promissory note dated as of
April 9, 1998 issued by the Owner-Trustee and NationsBank (as
assignee in interest of First Union) acting in its capacity as
co-trustee under the Trust Agreement, to NationsBank (as assignee
in interest of First Union) in the principal face amount of
$12,610,000.
(f) The definition of "Certificate" in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"Certificate" means that certain Certificate dated as of April
9, 1998 issued by the Owner-Trustee to NationsBank (as assignee in
interest of First Union) in the principal face amount of $390,000.
(g) The definition of "Expiration Date" in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Expiration Date" means October 6, 1998.
(h) The definition of "Guaranty" in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"Guaranty" means that certain Guaranty Agreement dated as of
April 9, 1998 by the Borrowers in favor of NationsBank (as
assignee in interest of First Union) pursuant to which each of the
Borrowers has jointly and severally guaranteed the payment
obligations of the Owner-Trustee under the Bridge Note and the
Certificate.
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<PAGE> 3
(i) The definition of "Issuing Bank" in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"Issuing Bank" means NationsBank, N.A., as issuer of a Letter of
Credit.
(j) The definition of "Swingline Lender" in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Swingline Lender" means NationsBank, N.A., as the Lender with
respect to the Swingline Loans.
(k) The definition of "Swingline Committed Amount" in Section 1.1
of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
"Swingline Committed Amount" means $0.
2. Revolver Loans. (a) The first sentence of Section 2.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
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
less (x) the aggregate principal amount of Swingline Loans
outstanding less (y) the aggregate Conventional LOC Obligations or
(B) one hundred ten million dollars ($110,000,000) less (x) the
aggregate principal amount of Swingline Loans outstanding less (y)
the aggregate Conventional LOC Obligations and less (z) the
Guaranty Reserve (except with respect to any request or deemed
request for a Revolver Loan advance pursuant to Section 2.13
hereof) and (ii) the aggregate principal amount of Revolver Loans
from any single Lender shall not at any time exceed such Lender's
Revolver Loan Commitment.
(b) Section 2.2(a)(ii)(B) of the Credit Agreement is amended such that the
principal amounts of Base Rate Loans shall now be $500,000 or an integral
multiple of $100,000 in excess thereof.
-3-
<PAGE> 4
3. Swingline Loan Facility. The first sentence of Section 2.3 of the
Credit Agreement is hereby amended by deleting the reference to "First Union"
and replacing it with a reference to "NationsBank."
4. Letters of Credit. The first sentence of Section 2.5(a) of the Credit
Agreement is hereby amended by deleting the reference to the figure
"$50,000,000" and replacing it with a reference to the figure "$110,000,000".
5. Repayment of Guaranty. Section 2.13 of the Credit Agreement is hereby
amended by deleting all references to "First Union" in such Section 2.13 and
replacing it with references to "NationsBank".
6. Use of Proceeds. Section 2.9 of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
SECTION 2.9 Use of Proceeds. The Borrowers shall use the proceeds of
the Loans (a) to pay the cash portion of the purchase price for the
Acquired Company pursuant to the Merger Agreement, (b) to refinance the
existing Debt of the Borrowers 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.
7. Interest Rate Options. The third sentence of Section 3.1(a) of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Commencing on the first day of the Initial Interest 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 plus the Applicable Margin
or the LIBOR Rate plus the Applicable Margin.
8. Applicable Margin. Section 3.1(c) and Section 3.1(d) of the Credit
Agreement are each hereby deleted in their entirety from the Credit Agreement.
9. Commitment Fee. Section 3.3(a) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
(a) Commitment Fee. In consideration of the Revolving Loan Commitments
hereunder, the Borrowers shall pay to the Administrative Agent for the
account of the Lenders, a non-refundable commitment fee equal to 0.25%
per annum (based on a 360 day year) on the average daily unused portion
of the Swingline Committed Amount and the aggregate Revolver Loan
Commitment. The commitment fee shall be payable in arrears on the last
Business Day of each calendar quarter 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.
-4-
<PAGE> 5
10. Financial Covenants. Section 8.1, Section 8.2, Section 8.3 and Section
8.4 of the Credit Agreement are each hereby deleted in their entirety from the
Credit Agreement.
11. Acquisitions. Notwithstanding Section 9.4 of the Credit Agreement, the
Lenders consent to the acquisition pursuant to the Merger Agreement.
12. Notices. Section 12.1(b) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
(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 the Borrower: The Maxim Group, Inc.
210 TownPark Drive
Kennesaw, Georgia 30144
Attention: Thomas P. Leahey, Executive
President/Finance
Telephone No.: (770) 590-9369
Telecopy No.: (770) 590-7709
If to NationsBank, N.A.,
as Administrative Agent NationsBank, N.A.
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Dave Dinkins
Telephone No.: (704) 386-2951
Telecopy No.: (704) 386-1270
and
NationsBank, N.A.
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attention: Agency Services/Jeff Strickland
Telephone No.: (704) 386-8388
Telecopy No.: (704) 388-9436
If to any Lender: The addresses set forth on Schedule 1.1
13. Administrative Agent's Office. Section 12.1(c) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:
-5-
<PAGE> 6
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office at NC1-001-15-04, 101 North Tryon Street,
Charlotte, North Carolina 28255 Attn: Agency Services, 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.
14. Commitment Percentages. Schedule 1.1 of the Credit Amendment is
hereby amended and restated in its entirety to read as provided on Schedule 1.1
attached hereto.
15. Conditions Precedent. The effectiveness of this Amendment is subject
to receipt by the Administrative Agent of the following:
(a) multiple counterparts of this Amendment and the Notes, in each
case duly executed by each party thereto.
(b) certified copies of resolutions or authorization of each Borrower
approving and adopting this Amendment, the transactions contemplated herein and
authorizing execution and delivery hereof.
(c) an opinion or opinions from counsel to the Borrower, in form and
substance satisfactory to the Administrative Agent, addressed to the
Administrative Agent on behalf of the Lenders and dated as of the date hereof.
(d) A fee, for its own account, in the amount of $1,709,625.
(e) Evidence satisfactory in form and substance to the Administrative
Agent that the Merger (as defined in the Merger Agreement) shall have been
consummated in accordance with the terms of the Merger Agreement. Receipt by the
Administrative Agent of the final Merger Agreement, together with all exhibits
and schedules thereto, certified by an officer of Maxim.
(f) Such other documents, instruments, agreements or information as
reasonably requested by the Administrative Agent.
16. Ratification of Credit Agreement. The term "Credit Agreement" as used
in each of the Loan Documents shall hereafter mean the Credit Agreement as
amended by this Amendment. Except as herein specifically agreed, the Credit
Agreement is hereby ratified and confirmed and shall remain in full force and
effect according to its terms.
-6-
<PAGE> 7
17. Authority/Enforceability. Each of the Borrowers represents and
warrants as follows:
(a) It has taken all necessary action to authorize the execution,
delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by such
Person and constitutes such Person's legal, valid and binding obligations,
enforceable in accordance with its terms, except as such enforceability may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(c) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental authority or third
party is required in connection with the execution, delivery or performance by
such Person of this Amendment.
18. No Default. The Borrowers represent and warrant to the Lenders that
(a) the representations and warranties of the Borrowers set forth in Article V
of the Credit Agreement are true and correct as of the date hereof and (b) no
event has occurred and is continuing which constitutes a Default or an Event of
Default under the Loan Documents.
19. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. Delivery of
executed counterparts by telecopy shall be effective as an original and shall
constitute a representation that an original will be delivered.
20. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
[remainder of page intentionally left blank]
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BORROWERS:
THE MAXIM GROUP, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Executive Vice President
-------------------------
IMAGE INDUSTRIES, INC.
By: /s/ H. Stanley Padgett
--------------------------------
Name: H. Stanley Padgett
---------------------------
Title: President
-------------------------
CARPETMAX OF KENTUCKY, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
CARPETMAX OF UTAH, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
CARPETMAX OF FLORIDA, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
RNA ENTERPRISES, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
-8-
<PAGE> 9
GCO, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
CARPETMAX OF TEXAS, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
CARPETMAX OF ALABAMA, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
CARPETMAX OF INDIANA, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
CARPETMAX OF NORTH CAROLINA, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
INVESTOR MANAGEMENT, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
GCO CARPET OUTLET, INC.
By: /s/ Thomas P. Leahey
--------------------------------
Name: Thomas P. Leahey
---------------------------
Title: Vice President
-------------------------
-9-
<PAGE> 10
MAXIM RETAIL GROUP, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
CARPETMAX OF IOWA, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
CARPETMAX, L.P.
By: The Maxim Group, Inc., as its
sole general partner
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Executive Vice President-Finance
---------------------------------
TRI-R OF ORLANDO, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
CARPETMAX OF PALM BEACH, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
CREDITMAX CORP.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
-10-
<PAGE> 11
CARPETMAX OF NEW MEXICO, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
CARPETMAX OF CHARLOTTE, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
CLOUD CARPETS, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
CARPETMAX ALABAMA CONTRACT, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
BAILEY & ROBERTS CARPETMAX OF
TENNESSEE, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
MAXIM EQUIPMENT LEASING COMPANY, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
-11-
<PAGE> 12
CARPETMAX OF JACKSONVILLE, INC.
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
----------------------------------
Title: Vice President
---------------------------------
-12-
<PAGE> 13
LENDERS:
NATIONSBANK, N.A.,
individually in its capacity as a Lender
and in its capacity as Administrative Agent
By: /s/ David H. Dinkins
----------------------------------------
Name: David H. Dinkins
--------------------------------------
Title: Vice President
-------------------------------------
-13-
<PAGE> 14
SCHEDULE 1.1
SCHEDULE OF LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
Revolving Loan SPLC
LENDER Commitment Commitment Percentage
------ ---------- ---------- ----------
<S> <C> <C> <C>
NATIONSBANK, N.A. $110,000,000 $31,000,000 100%
TOTAL $110,000,000 $31,000,000 100%
</TABLE>
-14-
<PAGE> 1
EXHIBIT 10.24
SUBORDINATED PROMISSORY NOTE
$18,048,000.00 August 9, 1998
Atlanta, Georgia
FOR VALUE RECEIVED, THE MAXIM GROUP, INC., a Georgia corporation
("Payor"), promises to pay to the order of SHAW INDUSTRIES, INC, a Georgia
corporation ("Payee"), at its address at 616 East Walnut Avenue, Dalton, Georgia
30720, or such other place as the Payee may from time to time designate in
writing, in lawful money of the United States of America, the principal sum of
EIGHTEEN MILLION FORTY-EIGHT THOUSAND AND NO/100 DOLLARS ($18,048,000.00), or so
much thereof as is outstanding from time to time, together with interest on so
much thereof as is from time to time outstanding and unpaid, at the rate paid by
Payor under that certain Credit Agreement by and among Payor and certain of its
subsidiaries, as borrowers, the parties which are referred to therein as
Lenders, and NationsBank, N.A., as Administrative Agent (by assignment First
Union National Bank) dated August 26, 1997, as the same may have heretofore been
or may hereafter be modified, amended or refinanced from time to time (the
"Credit Agreement"), said principal and all accrued but unpaid interest being
due and payable as set forth below.
Commencing September 1, 1998, and continuing on the first (1st) day of
each and every consecutive month thereafter, interest hereunder shall be due and
payable until such time as the principal balance of this Note shall have been
paid in full.
The principal balance of this Note shall be due and payable on August
9, 1999. Payor may prepay this Note in whole or in part at any time without
penalty or premium. Each prepayment of this Note shall be applied first to
unpaid interest accrued through the date of the prepayment and then to
principal.
Time is of the essence with respect to all of Payor's obligations and
agreements under this Note. The failure of Payor to pay any payment when due,
shall entitle Payee to declare the then remaining outstanding balance of this
Note to be, and the same shall thereupon become, immediately due and payable,
and Payee may proceed to collect such amounts forthwith, plus all costs of
collection, including reasonable attorneys' fees if collected by and through an
attorney. It is further agreed that failure of Payee to exercise this option or
indulgence granted from time to time shall in no event be considered a waiver of
such option or estop Payee from exercising such option.
Notwithstanding anything contained in this Note to the contrary, the
Payee does hereby subordinate any and all rights to performance and payment
hereunder by the Payor pursuant to the terms of this Note in favor of any and
all indebtedness of the Payor under the Credit Agreement or any other similar
agreement entered into by Payor with any lender or lenders which replaces the
credit facility evidenced by the Credit Agreement as Payor's senior secured
credit facility, or any liens, mortgages, deeds to secure debt or other
instruments, certificates or agreements related to any such senior secured
credit facility, whether now existing or hereafter arising (the "Liabilities").
Payor
<PAGE> 2
hereby agrees to promptly execute and deliver any and all subordination
agreements and other instruments, documents or certificates reasonably requested
by any such lender to further evidence the agreement to subordinate described
above. Except as may be otherwise provided in this Note, the Payee hereby agrees
that, in the event of a default under the Credit Agreement or any replacement
senior secured credit facility, entitling the lender to accelerate the principal
balance thereof, it will not ask for, demand, sue for or receive, and the Payor
will not pay any amounts due hereunder unless and until all Liabilities have
been paid and satisfied in full and all financing arrangements between the Payor
and such lender or lenders have been terminated in writing by such lender or
lenders, and any such payments received by the Payee shall be held in trust for
such lender or lenders and delivered thereto promptly upon demand.
In no contingency or event whatsoever shall the amount paid or agreed
to be paid to Payee for the use of money advanced hereunder exceed the highest
lawful rate permissible under any law which a court of competent jurisdiction
may deem applicable hereto; and, in the event any such payment is inadvertently
paid by Payor or inadvertently received by Payee, such excess sum shall be, at
Payor's option, returned to Payor forthwith or credited as a payment of
principal, but shall not be applied to the payment of interest. It is the intent
hereof that Payor not pay or contract to pay, and that Payee not receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by Payor under applicable law.
PAYOR, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, AND ALL OTHER
PERSONS LIABLE FOR THE PAYMENT OF THIS NOTE, WAIVES PRESENTMENT FOR PAYMENT,
DEMAND, PROTEST, AND NOTICE OF DISHONOR, PROTEST, AND NONPAYMENT, AND CONSENTS
TO ANY AND ALL RENEWALS, EXTENSIONS OR MODIFICATIONS THAT MIGHT BE MADE BY PAYEE
AS TO THE TIME OF PAYMENT OF THIS NOTE FROM TIME TO TIME, AND FURTHER AGREES
THAT THE SECURITY, IF ANY, FOR THIS NOTE OR ANY PORTION THEREOF MAY FROM TIME TO
TIME BE MODIFIED OR RELEASED IN WHOLE OR IN PART WITHOUT AFFECTING THE LIABILITY
OF ANY PARTY LIABLE FOR THE PAYMENT OF THIS NOTE.
This Note has been delivered in Atlanta, Georgia and shall be governed
by the laws of the State of Georgia (excluding conflict of laws provisions).
IN WITNESS WHEREOF, Payor has executed this Note under seal as of the
date first above written.
THE MAXIM GROUP, INC.
By: /s/ Thomas P. Leahey
-----------------------------------
Thomas P. Leahey
Executive Vice President - Finance
-2-
<PAGE> 1
EXHIBIT 10.25
SHAREHOLDER'S AGREEMENT
This Agreement is made and entered into this 9th day of
August, 1998, by and between THE MAXIM GROUP, INC., a Delaware corporation
(hereinafter called the "Company"), and SHAW INDUSTRIES, INC., a Georgia
corporation (hereinafter called the "Shareholder").
WHEREAS, concurrently with the execution of this Agreement,
the Company has issued to Shareholder an aggregate of 3,150,000 shares of the
Common Stock of the Company (hereinafter "Issued Shares") in connection with
that certain Agreement and Plan of Merger ("Purchase Agreement") dated June 23,
1998 by and among the Company, CMAX Acquisition, Inc., the Shareholder and Shaw
Carpet Showplace, Inc.; and
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Purchase Agreement that the parties hereto
execute and deliver this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by or is under common
control with the Person in question. In addition to the foregoing, with respect
to the Shareholder, "Affiliate" shall mean Robert E. Shaw, his lineal
descendants, and their immediate family members, trusts primarily for the
benefit of such individuals and Persons controlled, directly or indirectly, by
such individuals and/or trust.
"Commission" shall mean the United States Securities and
Exchange Commission and any successor federal agency having similar powers and
responsibility for administering the Securities Act.
"Common Stock" shall mean the $.001 par value Common Stock
of the Company.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended (or any similar successor statute) and the rules and
regulations thereunder, all as the same shall be in effect at the time.
"Holder" shall mean the Shareholder and/or any Affiliate
thereof to whom any of the Issued Shares shall have been transferred during the
term of this Agreement.
<PAGE> 2
"Person" means an individual or a corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Registrable Securities" shall mean the Issued Shares. Registrable
Securities will cease to be Registrable Securities when (i) a Registration
Statement covering such Registrable Securities has been declared effective under
the Securities Act by the Commission and such Registrable Securities have been
disposed of pursuant to such effective Registration Statement, (ii) such
securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act and in compliance with the requirements of
paragraphs (c) (e), (f) and (g) of Rule 144 (notwithstanding the provisions of
paragraph (k) of such Rule), or (iii) the Registrable Securities are sold or
distributed by a Person not entitled to the registration rights granted by this
Agreement.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and this Agreement, and the declaration or
ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 4 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company (including any fees incurred by Company counsel for
advice rendered to any seller of Registrable Securities), blue sky fees and
expenses, fees of the National Association of Securities Dealers, Inc. and
accountants' expenses, including without limitation, any special audits or
"comfort" letters incident to or required by any such registration, and any fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions.
"Registration Statement" means a registration statement filed pursuant
to the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Voting Securities" shall mean the shares of Common Stock and any
other securities of the Company entitled to vote generally in the election of
directors.
2. Transfer of Shares.
(a) Restrictions on Transfer. Shareholder agrees that it will not,
without the prior written consent of the Company, directly or indirectly,
offer, sell, exchange, pledge, hypothecate, encumber, transfer, assign or
otherwise dispose of (collectively, a "transfer") any Issued Shares for a
period of ninety (90) days after the date hereof.
-2-
<PAGE> 3
(b) Endorsement on Certificates, etc.
(i) Upon the execution of this Agreement, in addition to any other
legend which the Company may deem advisable under the Securities Act and
certain state securities laws, all certificates representing the Issued
Shares shall be endorsed as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A SHAREHOLDER'S AGREEMENT DATED AS OF __________
1998, BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THIS
CERTIFICATE AND, IN ACCORDANCE WITH SUCH AGREEMENT, MAY NOT BE
TRANSFERRED OR SOLD FOR A PERIOD OF 90 DAYS FROM THE DATE OF SUCH
AGREEMENT. A COPY OF THE ABOVE REFERENCED AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AS EVIDENCED BY AN
OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED.
(ii) Upon the expiration of the ninety (90) day period referred to
above, the holder of any certificate shall be entitled to receive from the
Company, without expense, upon delivery to the Company of the existing
certificate representing such shares of Common Stock, a new certificate not
bearing the first restrictive legend set forth in clause (i) of this Section
2(b). The second legend set forth in clause (i) of this Section 2(b) shall
be removed from a particular certificate representing shares of Common Stock
when such security (A) shall have been sold to the public pursuant to an
effective registration statement, (B) shall have been sold in compliance
with the provisions of Rule 144 under the Securities Act or (C) becomes
eligible for sale to the public pursuant to Rule 144(k) under the Securities
Act.
(c) Improper Transfer. Any attempt to transfer or encumber any shares
of Common Stock other than in accordance with the terms of this Agreement
shall be null and void and neither the Company nor any transfer agent of
such securities shall give any effect to such attempted transfer or
encumbrance in its stock records.
3. Standstill. The Shareholder hereby agrees that, for a period of one
year from the date hereof, without the prior written consent of the Company, the
Shareholder will not, and the Shareholder will use its reasonable best efforts
to cause each of its Affiliates not to, directly or indirectly:
-3-
<PAGE> 4
(i) acquire, publicly announce an intention to acquire, offer
or propose to acquire, or agree to acquire (except, in any case, by way of
stock dividends or other distributions or offerings made available to
holders of any Common Stock generally), directly or indirectly, whether by
purchase, tender or exchange offer, through the acquisition of control of
another Person, by joining a partnership, limited partnership, syndicate or
other "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
or otherwise, any equity securities of the Company; provided, however, that
the Shareholder and/or any of its Affiliates may acquire additional shares
of Common Stock in open market or privately-negotiated transactions as long
as the Shareholder and its Affiliates, collectively, shall not, as a result
of such purchase or purchases, beneficially own in excess of 25% of the
outstanding shares of Common Stock;
(ii) make, or in any way participate, directly or indirectly, in
any "solicitation" (as such term is used in the proxy rules of the
Commission as in effect on the date hereof) of proxies or consents
(whether or not relating to the election or removal of directors), seek to
advise, encourage or influence any Person with respect to the voting of
any Voting Securities, initiate, propose or otherwise "solicit" (as such
term is used in the proxy rules of the Commission as in effect on the date
hereof) stockholders of the Company for the approval of stockholder
proposals made pursuant to Rule 14a-8 of the Exchange Act, or induce or
attempt to induce any other Person to initiate any such stockholder
proposal;
(iii) seek, propose, or make any public statement (whether
written or oral) with respect to, any merger, consolidation, business
combination, tender or exchange offer, sale or purchase of assets, sale or
purchase of securities (except as and to the extent specifically permitted
hereby), dissolution, liquidation, restructuring, recapitalization or
similar transactions of or involving the Company or any of its Affiliates
or solicit or encourage any other Person to make any such public statement
or proposal;
(iv) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
Voting Securities, other than groups consisting solely of directors of the
Company, other parties hereto and their respective Affiliates;
(v) deposit any Voting Securities in any voting trust or
subject any Voting Securities to any arrangement or agreement with respect
to the voting of any Voting Securities;
(vi) execute any written consent with respect to the Company or
its Voting Securities;
-4-
<PAGE> 5
(vii) otherwise act, alone or in concert with others, to control
or seek to control or influence or seek to influence the management, Board
of Directors or policies of the Company;
(viii) seek, alone or in concert with others, representation on
the Board of Directors of the Company or seek the removal of any member of
the Board of Directors;
(ix) make any publicly disclosed proposal or enter into any
discussion regarding any of the foregoing;
(x) publicly make any proposal, statement or inquiry, or
publicly disclose any intention, plan or arrangement (whether written or
oral) inconsistent with the foregoing, or publicly make or disclose any
request to amend, waive or terminate any provision of this Agreement or
the Certificate of Incorporation or By-laws of the Company; or
(xi) enter into any arrangements, understandings or agreements
(whether written or oral) with, or advise, finance or assist, any other
Person in connection with any of the foregoing, or make any investment in
or enter into any arrangement with, any other Person that engages, or
offers or proposes to engage, in any of the foregoing.
4. Registration under Securities Act.
4.1 Shelf Registration.
(a) Effective Registration. The Company shall file, as soon
as practicable following the date of this Agreement (but not later than 30
days thereafter), a "shelf" registration statement (the "Shelf
Registration") covering the securities then constituting Registrable
Securities on any appropriate form pursuant to Rule 415 under the
Securities Act so as to permit the continuous or delayed offering of the
Registrable Securities by the Holders. The Company shall cause the Shelf
Registration to be declared effective on or prior to the 90th day after
the date of this Agreement and to keep such registration statement
continuously effective until the earlier to occur of (i) all Registrable
Securities included therein have been sold or (ii) the later to occur of
(x) two (2) years after the date of this Agreement or (y) such time as the
Shareholder is not an "affiliate" of the Company within the meaning of
Rule 144 under the Securities Act.
(b) Shelf "Draw-Downs." If any holder of Registrable
Securities effects, pursuant to the Shelf Registration, an underwritten
public offering of all or a part of its Registrable Securities (a shelf
"draw-down") and wishes the Company to perform, in connection with such
shelf "draw-down," any procedures specified in Section 4.3 hereof, such
holder shall deliver to the Company, at least ten (10) business days
before such "draw-down" is to be made, a written notice describing in
reasonable detail its proposed offering and requesting the performance of
such procedures pursuant to this Section 4.1 and Section 4.3. The Company
shall be required to perform such procedures in advance of a particular
shelf
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<PAGE> 6
"draw-down" only if such holder shall have requested such performance as
provided above. In addition, the Company shall be required to perform such
additional procedures (other than those required under the securities
laws) in connection with a particular shelf "draw-down" only if one or
more holders shall have notified the Company pursuant to this Section
4.1(b) of their intention to offer to the public Registrable Securities
with an aggregate market value (on the date the written notice referred to
above is delivered) of at least $10,000,000 pursuant to such "draw-down."
The Company shall have the right to sell shares of Common Stock
in an underwritten registered offering conducted simultaneously with any
such shelf "draw-down" on a primary basis; provided that in the event the
managing underwriter of such underwritten offering shall have advised the
Company and the Holders that, in its judgment, the distribution of all or
a specified portion of the shares requested to be so included concurrently
with the securities being distributed by such underwriters will adversely
affect the distribution of such securities by such underwriters, then the
Holders may require, by written notice to the Company, that the
distribution of all or a specified portion of such shares proposed to be
sold by the Company be excluded from such distribution.
The Company shall not be obligated to effect more than two (2)
such shelf "draw-downs." In addition, the Company shall not be obligated
to effect any shelf "draw-down" within (i) 60 days after the effective
date of a previous offering of Common Stock registered under the
Securities Act or (ii) 270 days after the completion of a previously
requested shelf "draw-down." The Company may postpone for up to 75 days
the filing or the effectiveness of any such requested shelf "draw-down" if
the Company's Board of Directors determines in its reasonable good faith
judgment that such shelf "draw-down" would reasonably be expected to have
a material adverse effect on any proposal or plan by the Company or any of
its subsidiaries to engage in any acquisition (other than in the ordinary
course of business) or any merger, consolidation, tender offer,
reorganization or similar transaction.
(c) Registration Statement Form. The registration made pursuant
to this Section 4.1 shall be effected by the filing of a registration
statement on any form which the Company is eligible to use, such form to
be selected by the Company, after consultation with counsel and after
notice of such selection of such form is delivered to the holders of all
Registrable Securities electing to participate in such registration; but
in no event shall the Company be required to maintain the effectiveness of
such registration beyond the period specified in Section 4.1(a).
(d) Expenses. Except as otherwise prohibited by applicable law,
the Company will pay all Registration Expenses in connection with (i) the
registration of Registrable Securities pursuant to Section 4.1(a) and (ii)
one (1) shelf "draw-down" pursuant to Section 4.1(b).
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<PAGE> 7
4.2 Incidental Registration.
(a) Right to Include Registrable Securities. If, at any time
after the date of this Agreement, the Company proposes to register any of its
equity securities under the Securities Act, whether for sale for its own account
or for the account of any other person, on a form and in a manner which would
permit registration of Registrable Securities for sale to the public under the
Securities Act, so long as any holder of Registrable Securities cannot sell all
of such Registrable Securities pursuant to Rule 144 under the Securities Act,
the Company will each such time give prompt written notice to such holder(s) of
Registrable Securities of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration, and upon the written request of any such holder delivered
to the Company within ten (10) business days after the giving of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method or methods of disposition thereof),
the Company will use its reasonable best efforts to effect the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register by the holders of Registrable Securities
(hereinafter "Requesting Holder"), to the extent requisite to permit the
disposition of the Registrable Securities in accordance with the intended
methods thereof as specified by the holders of a majority of the Registrable
Securities so to be registered, provided that:
(i) if, at any time after giving such written notice of its
intention to register any of its securities and prior to the
effective date of the registration statement filed in connection
with such registration, the Company shall determine for any
reason not to register such securities, the Company may, at its
election, give written notice of such determination to each
Requesting Holder and thereupon shall be relieved of its
obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith as provided in
subdivision (b) of this Section 4.2);
(ii) if (A) the registration so proposed by the Company
involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the
Company, to be distributed by or through one (1) or more
underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (B) the Company proposes that
the securities to be registered in such underwritten offering
will not include all of the Registrable Securities requested to
be so included, and (C) the managing underwriter of such
underwritten offering shall advise the Company and the Requesting
Holders in writing that, in its judgment, the distribution of all
or a specified portion of the Registrable Securities requested to
be so included concurrently with the securities being distributed
by such underwriters will adversely affect the distribution of
such securities by such underwriters, then the Company may
require, by written notice to each such holder, that the
distribution of all or a specified portion of such Registrable
Securities be excluded from such distribution (in case of an
exclusion of a portion of such Registrable Securities, such
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<PAGE> 8
portion to be allocated among such holders in proportion to the
respective numbers of shares of Registrable Securities owned by
such holders) provided that, the number of shares of Registrable
Securities included shall be reduced pro rata with any securities
being offered for the account of any Person other than the
Company (other than pursuant to the "demand" registration rights
of such Person);
(iii) the Company shall not be obligated to effect any
registration of Registrable Securities under this Section 4.2
incidental to the registration of any of its securities in
connection with mergers, acquisitions, exchange offers, dividend
reinvestment plans or stock option or other employee benefit
plans or incidental to the registration of any non-equity
securities not convertible into equity securities;
(iv) the Company shall not be required to include any
Registrable Securities in any registration statement pursuant to
this Section 4.2 if the Requesting Holders can at the time of the
request sell the securities requested to be so included in the
registration statement pursuant to Rule 144 under the Securities
Act; and
(v) the Company may, but shall not be obligated to, effect
any registrations pursuant to this Section 4.2.
No registrations of Registrable Securities effected under this Section 4.2 shall
relieve the Company of its obligation to effect registration of Registrable
Securities pursuant to Section 4.1.
(b) Expenses. Except as otherwise prohibited by applicable law, the
Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section
4.2.
4.3 Registration Procedures. If and whenever the Company is required
to effect the registration of any Registrable Securities under the Securities
Act as provided in Sections 4.1 and 4.2 or any "draw-down" pursuant to Section
4.1, the Company will promptly:
(a) cooperate with any underwriters for, and the holders of such
Registrable Securities, and will enter into a usual and customary
underwriting agreement with respect thereto and take all such other
reasonable actions as are necessary or advisable to permit, expedite and
facilitate the disposition of such Registrable Securities in the manner
contemplated by the related registration statement, and the Company will
provide to the holders of such Registrable Securities, any underwriter
participating in any distribution thereof pursuant to a registration
statement, and any attorney, accountant or other agent retained by any holder
of Registrable Securities or underwriter, reasonable access to appropriate
Company officers and employees to answer questions and to supply financial
and other information reasonably requested by any such holders of Registrable
Securities, underwriter, attorney, accountant or agent in connection with
such registration statement;
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<PAGE> 9
(b) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and cause such registration
statement to become effective;
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and, with respect to any "draw-down," to reflect the method of
disposition of the Registrable Securities pursuant to such "draw-down," and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities and other securities covered by
such registration statement until the earlier of such time as all of such
Registrable Securities and such other securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or, in the case of a
registration pursuant to Section 4.2 hereof, the expiration of sixty (60)
days after such registration statement becomes effective; and will furnish,
upon request, to each such seller prior to the filing thereof a copy of any
amendment or supplement to such registration statement or prospectus and
shall not file any such amendment or supplement to which any such seller
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act or of the rules or regulations thereunder;
(d) furnish to each seller of such Registrable Securities and the
underwriters (if any) such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Securities
Act, such documents, if any, incorporated by reference in such registration
statement or prospectus, and such other documents, as such seller may
reasonably request;
(e) promptly, upon written request, deliver to each seller of
Registrable Securities and the underwriters (if any), copies of all
correspondence between the Commission and (i) the Company, (ii) its counsel,
or (iii) its auditors, with respect to the registration statement;
(f) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement under
such other securities or blue sky laws of the states of the United States as
each seller shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities covered by such registration
statement, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Subsection
(f) be obligated to be so qualified, or to subject itself to taxation in any
such jurisdiction, or to consent to general service of process in any such
jurisdiction;
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<PAGE> 10
(g) immediately notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, which untrue statement or omission requires amendment of the
registration statement or supplementation of the prospectus, and at the
request of any such seller, prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; provided, however, that each holder
of Registrable Securities registered pursuant to such registration statement
agrees that he will not sell any Registrable Securities pursuant to such
registration statement during the time that the Company is preparing and
filing with the Commission a supplement to or an amendment of such prospectus
or registration statement;
(h) in the event of the issuance of any stop order suspending the
effectiveness of any registration statement or of any order suspending or
preventing the use of any prospectus or suspending the qualification of any
Registrable Securities for sale in any jurisdiction, use its best efforts to
obtain its withdrawal;
(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve (12) months, but not more than eighteen (18)
months, beginning with the first month of the first fiscal quarter after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(j) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement; and
(k) use its best efforts to list all Common Stock covered by such
registration statement on each securities exchange or securities quotation
system on which any of the Common Stock is then listed.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request and as shall be required by law or by the Commission
in connection therewith.
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<PAGE> 11
4.4 Underwritten Offerings.
(a) Underwriting Agreement. If requested by the underwriters for
any "draw-down" of Registrable Securities on behalf of a holder or holders
of Registrable Securities pursuant to a registration under Section 4.1, the
Company will enter into an underwriting agreement reasonably acceptable to
the Company with such underwriters for such offering, such agreement to
contain such representations and warranties by the Company and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
provisions with respect to opinions of Company's counsel, customary "comfort"
letters from the Company's independent auditors and indemnities to the effect
and to the extent provided in Section 4.6. The holders of Registrable
Securities on whose behalf Registrable Securities are to be distributed by
such underwriters shall be parties to the underwriting agreement between the
Company and such underwriters. Such holders of Registrable Securities shall
not be required by the Company to make any representations or warranties to
or agreements with the Company or the underwriters other than reasonable
representations, warranties or agreements (including indemnity agreements
customary in secondary offerings) regarding such holder, such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 4.2 and such securities are to be distributed by or
through one (1) or more underwriters, the Company will use its best efforts,
if requested by any holder or holders of Registrable Securities who requests
incidental registration of Registrable Securities in connection therewith
pursuant to Section 4.2, to arrange for such underwriters to include the
Registrable Securities to be offered and sold by such holder among the
securities to be distributed by or through such underwriters, provided that,
for purposes of this sentence, best efforts shall not require the Company to
reduce the amount or sale price of such securities proposed by the Company to
be distributed by or through such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters. Such
holders of Registrable Securities shall not be required by the Company to
make any representations or warranties to or agreements with the Company or
the underwriters other than reasonable representations, warranties or
agreements (including indemnity agreements customary in secondary offerings)
regarding such holder, such holder's Registrable Securities and such holder's
intended method or methods of distribution and any other representation
required by law.
(c) Allocation of Over-Allotment Option. Whenever the Company
shall effect an underwritten offering of Registrable Securities pursuant to a
registration subject to Section 4.2 hereof, the securities to be sold
pursuant to the underwriter's exercise of an over-allotment option (the
"Over-Allotment Shares"), if any, shall be allocated as follows: (i) in any
such registration in which the number of Registrable Securities requested to
be registered has not been reduced based on the advice of the managing
underwriter of such offering, then the sellers of Registrable Securities
shall not be entitled to sell any Registrable Securities as part of the
Over-Allotment
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<PAGE> 12
Shares, and (ii) in any such registration in which the number of
Registrable Securities requested to be registered has been reduced
pursuant to the provisions hereof based on the advice of the managing
underwriter of such offering, then the sellers of Registrable Securities
participating in such offering may sell that number of Over-Allotment
Shares equal to the total number of Over-Allotment Shares multiplied by a
fraction the numerator of which is the number of total principal offering
shares that constitute Registrable Securities and the denominator of which
is the total number of principal offering shares, which shares shall be
allocated on a pro rata basis among the sellers of Registrable Securities
participating in such registration based upon the number of Registrable
Securities originally requested to be registered; provided, however, that
the number of Registrable Securities that constitute Over-Allotment Shares
shall not exceed the number of Registrable Securities requested to be
registered but which were not registered based on the advice of the
managing underwriter.
(d) Selection of Underwriters. Whenever an offering pursuant to
Section 4.1 is an underwritten offering, the holders of a majority of the
Registrable Securities included in such registration shall have the right
to select the managing underwriter(s) to administer the offering, after
consulting with the Company as to such selection and subject to the
approval of the Company, which approval will not be unreasonably withheld.
If the Company at any time proposes to register any of its securities
under the Securities Act for sale for its own account and such securities
are to be distributed by or through one (1) or more underwriters, the
selection of the managing underwriter(s) shall be made by the Company and
notice of the selection thereof delivered to the holders of all
Registrable Securities eligible to participate in such registration.
(e) Holdback Agreements.
(i) If any registration pursuant to Section 4.2 shall be in
connection with an underwritten public offering, each holder of
Registrable Securities agrees by acquisition of such Registrable
Securities that, so long as such holder shall have the right to
request that Registrable Securities be included in such registration
statement, if so required by the managing underwriter, such holder
shall not effect any public sale or distribution of Registrable
Securities (other than as part of such underwritten public offering)
for such period as the officers and directors of the Company are
required by the underwriter to cease sales or distributions.
(ii) The Company agrees not to effect any public sale or
distribution of any of its equity securities or securities
convertible into or exchangeable or exercisable for any of such
securities during the seven (7) days prior to and during the ninety
(90) day period beginning on the date on which any underwritten
offering pursuant to Section 4.1 or 4.2 has commenced, except as
part of such underwritten offering and except pursuant to
registrations on Form S-8 or Form S-4 or any successor thereto.
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4.5 Preparation; Reasonable Investigation.
(a) Seller Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding the distribution of such securities as
the Company may from time to time reasonably request in writing and as shall be
required by law in connection therewith.
(b) Seller Diligence. In connection with the preparation and filing
of each registration statement registering Registrable Securities under the
Securities Act and any amendment or supplement to the prospectus included
therein, the Company will give the holders of Registrable Securities on whose
behalf such Registrable Securities are to be so registered, the opportunity to
review such registration statement, each prospectus included therein or filed
with the Commission and each amendment thereof or supplement thereto, and, in
the event such offering of Registrable Securities is underwritten, will give
each of them and the underwriters and their counsel such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be reasonably necessary in the opinion of such holders and
such underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. To minimize disruption
and expense to the Company during the course of the registration process,
sellers of Registrable Securities to be covered by any such registration
statement shall coordinate their investigation and due diligence efforts
hereunder and, to the extent practicable, will act through a single set of
counsel and a single set of accountants.
4.6 Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless in the case of any registration
statement filed pursuant to Section 4.1 or 4.2, the seller of any Registrable
Securities covered by such registration statement, and if such seller is a
corporation, its directors, trustees and officers, employees and agents, each
other person who participates as an underwriter in the offering or sale of such
securities and each other person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act against any losses, claims,
damages, liabilities or expenses, joint or several, to which such seller or any
such director, trustee, officer, employee or agent, participating or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings in
respect thereof) arise out of or are based upon (x) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any document incorporated by
reference therein, (y) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (z) any violation by the Company of any rule or
regulation promulgated under the Securities Act or the Exchange Act,
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<PAGE> 14
or other federal or state securities law applicable to the Company and relating
to any action or inaction required of the Company in connection with such
registration, and the Company will reimburse such seller, and each such
director, trustee, officer, employee or agent, participating person and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding, provided that the Company shall not be liable
in any such case if and to the extent that any such loss, claim, damage,
liability or expense (or action or proceeding in respect thereof) arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the underwriters or by such seller or any such director, trustee,
officer, employee or agent, participating person or controlling person
specifically for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such seller or any such director, trustee, officer, employee or agent,
participating person or controlling person and shall survive the transfer of
such securities by such seller.
(b) Indemnification by the Sellers. As a condition to including any
Registrable Securities in any registration statement filed pursuant to Section
4.1 or 4.2, each seller of Registrable Securities shall, severally and not
jointly, indemnify and hold harmless the Company, its directors and officers,
employees and agents, and each other person, if any, who controls the Company,
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director or officer or any such person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which Registrable Securities were registered under the Securities Act, or
in any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (ii) any alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent that
such alleged untrue statement or alleged omission was contained in written
information furnished to the Company by such holder specifically for use
therein, and shall reimburse the Company or such director, officer or other
person for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such loss, claim, damage, liability or
action. Notwithstanding the foregoing, the obligations of any seller of
Registrable Securities shall be limited to an amount equal to the proceeds
received by such seller from the sale of Registrable Securities pursuant to the
registration statement to which the losses, claims, liabilities or damages
relate.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subsections of this Section 4.6, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein
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<PAGE> 15
shall not relieve the indemnifying party of its obligations under the
preceding subsections of this Section 4.6, except and to the extent that the
indemnifying party is prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs
of investigation and of liaison with counsel so selected, provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party, and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party, or
if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select one (1) separate law firm as counsel and to
assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as the same shall be incurred. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any seller of Registrable Securities exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 4.6, but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 4.6 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required
on the part of any such seller or any such controlling person in
circumstances for which indemnification is provided under this Section 4.6,
then, and in each such case, the Company and such seller will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) (A) in such proportion so that such
seller is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, or (B) if the allocation provided by
clause (A) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative proceeds but also the relative
fault of each of the contributing parties, on the one hand, and the party
receiving contribution, on the other hand, in connection with statements or
omissions that resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable
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consideration; provided, however, that in any such case, (1) no such seller
will be required to contribute any amount in excess of the aggregate public
offering price of all such Registrable Securities offered by such seller
pursuant to such registration statement; and (2) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation. Relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, or by such seller, and the relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, expenses or liabilities (or actions in respect
thereof) referred to above in this Subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by a party entitled to
contribution in connection with investigating or defending such action or
claim. Any party entitled to contribution will promptly after receipt of
notice of commencement of any action or proceeding against such party in
respect of which a claim for contribution may be made against another party
or parties under this Subsection (d), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have hereunder or otherwise than
under this Subsection (d), to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any party may have at
common law or otherwise.
(e) Other Indemnification. Indemnification similar to that
specified in the preceding subsections of this Section 4.6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification
of such Registrable Securities under any federal or state law or regulation
of governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification required by this
Section 4.6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
5. Rule 144. For so long as the Company shall have any class of its equity
securities registered under Section 12(b) or Section 12(g) of the Exchange Act,
the Company shall take such action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell shares of Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission including,
without limitation,
(a) filing with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
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<PAGE> 17
(b) furnishing to any holder of Registrable Securities, upon
request, (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144 and the Exchange Act; (ii) a copy
of the most recent annual or quarterly report of the Company; and (iii)
such other information as may be reasonably required to permit sales of
Registrable Securities under Rule 144.
6. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of a majority of the Issued Shares. Each holder of any Issued Shares at
the time shall be bound by any consent authorized by this Section 6.
7. Termination. This Agreement shall terminate on the earlier to occur
of:
(a) the date that the Company and the Shareholder mutually agree to
terminate this Agreement; or
(b) the twentieth anniversary of the date of this Agreement unless
earlier renewed by unanimous written agreement of the Company and the
Shareholder.
8. Notices. Notices and other communications under this Agreement
shall be in writing and shall be deemed given when personally delivered, or, if
by U.S. mail, three (3) days after mailing, by Certified First Class Mail,
postage prepaid, return receipt requested, addressed
(a) to any holder of Issued Shares at the address shown on the
stock transfer books of the Company unless such holder has advised the
Company in writing of a different address as to which notices shall be
sent under this Agreement, and
(b) if to the Company at 210 TownPark Drive, Kennesaw, Georgia
30144, to the attention of the President, or to such other address or to
the attention of such other officer, as the Company shall have furnished
to each holder of Issued Shares at the time outstanding.
9. Miscellaneous. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto. This Agreement may not be assigned without the approval of a
majority of the holders of the Issued Shares. This Agreement embodies the entire
agreement and understanding between the Company and the other parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof. This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Georgia. The headings in this Agreement
are for purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one (1) instrument.
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<PAGE> 18
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
THE MAXIM GROUP, INC.
By: /s/ Thomas P. Leahey
---------------------------------
Thomas P. Leahey, Executive Vice
President-Finance and Treasurer
Attest:
/s/ Gary Brugliera
- -----------------------------------------
Gary Brugliera, Senior Executive
Vice President, Chief Financial Officer
and Secretary
SHAREHOLDER
SHAW INDUSTRIES, INC.
By: /s/ Bennie M. Laughter
----------------------------------
Bennie M. Laughter, Vice
President and Secretary
Attest:
/s/ John L. Miller
- -----------------------------------------
John L. Miller, Assistant Secretary
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