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As filed with the Securities and Exchange Commission on September 4, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE MAXIM GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-2060334
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
(770) 590-9369
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
A.J. NASSAR, PRESIDENT
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
(770)590-9369
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
ROBERT T. MOLINET, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
1230 PEACHTREE STREET, N.E., SUITE 3100
ATLANTA, GEORGIA 30309
(404)815-3643
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price per aggregate offering Amount of
securities to be registered registered share (1)(2) price (1) registration fee
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Common Stock, par value 3,150,000 $18.28 $57,582,000 $16,987
$.001 per share.......
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</TABLE>
(1) The shares of Common Stock are being registered hereby for the account of
certain shareholders of the Company. No other shares of Common Stock are
being registered pursuant to this offering. Pursuant to Rule 416, this
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may be issued because of future stock dividends,
stock distributions, stock splits, or similar capital readjustments.
(2) Estimated solely for the purpose of calculating the filing fee pursuant to
Rule 457(c) under the Securities Act of 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 4, 1998
PROSPECTUS
3,150,000 SHARES
THE MAXIM GROUP, INC.
COMMON STOCK
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The 3,150,000 shares of Common Stock (the "Common Stock") of The Maxim
Group, Inc. (the "Company") offered hereby are being sold by the holder of the
Common Stock of the Company named herein under "Selling Shareholder." Unless
the context otherwise requires, the holder of the Common Stock selling shares
hereunder is hereinafter referred to as the "Selling Shareholder." The Company
will not receive any proceeds from the sale of the Common Stock by the Selling
Shareholder. See "Selling Shareholder," "Plan of Distribution" and "Use of
Proceeds."
The Common Stock is traded on the New York Stock Exchange under the symbol
"MXG." On September 2, 1998, the last reported sale price for the Common
Stock, as reported on the New York Stock Exchange, was $19.00 per share.
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SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT
IN THE COMMON STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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Offering Underwriting Proceeds to Proceeds
Price to Discounts and Selling to
Public Commissions Shareholders Company
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<S> <C> <C> <C> <C>
Per Share...................... See Text See Text See Text See Text
Total.......................... Below Below Below Below
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</TABLE>
The Selling Shareholder has advised the Company that it may elect to offer
for sale and to sell the Common Stock from time to time in one or more
transactions through brokers on the New York Stock Exchange, in private
transactions, or otherwise, in each case at market prices then prevailing or
obtainable. Accordingly, sales prices and proceeds to the Selling Shareholder
will depend upon price fluctuations and the manner of sale. The Selling
Shareholder may effect such transactions by selling to or through one or more
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, brokerage commissions or similar fees in amounts which
may vary from transaction to transaction. Such brokerage commissions and
charges, if any, will be paid by the Selling Shareholder. The Company will
bear all other expenses in connection with registering the shares offered
hereby, which expenses are estimated to total approximately $30,000. See "Plan
of Distribution."
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The date of this Prospectus is September ___, 1998
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AVAILABLE INFORMATION
The Company is subject to certain informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission
(the "Commission") Such reports and other information can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can also be obtained at prescribed rates by writing to the Securities
and Exchange Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a web site that
contains reports, proxy and information statements and other information
regarding the Company at http://www.sec.gov. Such reports, proxy statements and
other information concerning the Company may also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed a Registration Statement on Form S-3 (together with
all amendments and exhibits filed or to be filed in connection therewith, the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the Common Stock offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant to
the 1934 Act are hereby incorporated in this Prospectus by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998;
(2) The Company's Amendment No. 1 on Form 10-K/A dated June 26, 1998 to its
Annual Report on Form 10-K for the fiscal year ended January 31, 1998;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended April
30, 1998;
(4) The Company's Current Report on Form 8-K dated June 23, 1998;
(5) The Company's Current Report on Form 8-K dated August 9, 1998; and
(6) The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A as filed with the Commission on
August 12, 1993 and as amended by Amendment No. 1 on Form 8-A/A as
filed with the Commission on August 26, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement.
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Any such statement so modified shall not be deemed, except as so modified and
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, upon written or oral request of such person, a copy of any and all
of the information that has been incorporated by reference in this Prospectus
(excluding exhibits unless such exhibits are specifically incorporated by
reference into such documents). Please direct such requests to the Secretary,
The Maxim Group, Inc., 210 TownPark Drive, Kennesaw, Georgia 30144, telephone
number (770) 590-9369.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including the documents incorporated by reference herein,
contains statements that constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the 1934
Act. These statements appear in a number of places in this Prospectus and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
the timing, magnitude and costs of the roll-out of the CarpetMax Flooring Idea
Gallery(TM) stores;(ii) potential acquisitions by the Company; (iii) the
Company's financing plans; (iv) trends affecting the Company's financial
condition or results of operations; (v) the Company's business and growth
strategies; and (vi) the Company's ability to successfully integrate acquired
businesses. Investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors. Among others, factors
that could adversely affect actual results and performance include local and
regional economic conditions in the areas served by the Company, the level of
customer spending for floor covering products, competition among floorcovering
retailers and carpet manufacturers, changes in merchandise mixes, site selection
and related traffic and demographic patterns, inventory management and turnover
levels, realization of cost savings, and the Company's success in integrating
recent and potential future acquisitions. The accompanying information contained
in this Prospectus, as well as in the Company's 1934 Act filings, identifies
important additional factors that could adversely affect actual results and
performance. Prospective investors are urged to carefully consider such factors.
All forward-looking statements attributable to the Company are expressly
qualified in their entirety by the foregoing cautionary statements.
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THE COMPANY
The Maxim Group, Inc. (the "Company") operates and franchises one of the
largest floor covering distribution networks in North America through several
retail floor covering concepts, including CarpetMAX(R), New York Carpet World
and Carpetland USA, each a full-service floorcovering store format, and Georgia
Carpet Outlets(TM) ("GCO(R)"), a cash-and carry discount floorcovering store
format. In addition, the Company, through its Image Industries, Inc. subsidiary
("Image"), is one of the largest manufacturers of polyester carpeting in the
United States. As a vertically integrated carpet manufacturer and a leading
floor covering retailer, the Company believes that it is well positioned to
continue its leadership and growth in the approximately $15 billion floor
covering industry.
Since commencing operations in 1991 as a franchiser of floor covering
stores, the Company has grown its franchise network to include 380 franchise
territories, within which there are 463 CarpetMAX stores and 101 GCO stores in
49 states. The Company's fees from franchise services consist of up front
membership fees, either ongoing royalties or product brokerage fees and fees for
services such as advertising and employee training. The rapid growth of the
Company's franchise network resulted in the development of an integrated retail
infrastructure, including store development, marketing, advertising, credit,
sales training and product sourcing resources. In an effort to leverage this
retail infrastructure, the Company began acquiring existing CarpetMAX
franchisees in fiscal 1995 and opening Company-owned stores in fiscal 1996.
On August 9, 1998, 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"). These assets include 266
retail stores, each of which operates under one of ten brand names, including
New York Carpet World, Carpetland USA or Carpet Exchange. The Company intends to
continue operating the residential retail store assets of Shaw as retail
floorcovering stores. In addition to these newly acquired stores, the Company
currently owns 71 CarpetMAX scores (including 39 Gallery stores) and six GCO
stores.
The Company has further developed its full-service retail format to offer
customers a wide selection of competitively priced floor covering products
through CarpetMAX Flooring Idea Gallery stores (the "Galley" stores). The
Company's Gallery stores are typically 6,500 square feet in size and offer
approximately 15,000 SKUs, including an extensive merchandising mix of carpet,
area rugs, hardwood flooring, ceramic tile, vinyl flooring, laminates and stone.
Gallery stores are located in prime retail locations with high consumer
visibility and are staffed with specialized floor covering sales associates.
Gallery stores offer a wide range of services, including interior design
consulting, measuring, delivery and installation, and unconditional satisfaction
guarantees. The Company's strategy is to expand its ownership and operation of
Gallery stores. The Company currently operates 39 Gallery stores, including
eight stores which were converted into Gallery stores from the original
CarpetMAX format.
Through Image, the Company is one of the largest manufacturers of polyester
carpeting and one of the largest recyclers of polyethylene terephthalate ("PET")
soft drink bottles in the United States. The Company converts PET bottles into
PET flake and pellet and polyester fiber which is either sold to third parties
or spun into carpet yarn, the raw material used in manufacturing polyester
carpet. Image's vertically integrated operations provide the Company's retail
network with a captive source of low cost, high quality private label polyester
carpeting with a price advantage relative to competitors. The Company believes
that polyester carpeting, which currently accounts for approximately 8% of
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industry-wide carpet sales will enjoy market share growth because of certain
advantages over other carpet fibers such as nylon, including superior stain
resistance and vibrant coloring. For the year ended January 31, 1998, Image sold
3.0 million square yards of polyester carpeting through the Company's retail
distribution network (10.4% of total Image sales volume). Image sells to over
6,000 independent domestic and international retailers and distributors.
The Company's principal executive offices are located at 210 TownPark
Drive, Kennessaw, Georgia 30144, telephone number (770) 590-9369.
RECENT RESULTS
On September 1, 1998, the Company announced financial results for the three
and six month periods ended July 31, 1998. Revenues for the three months ended
July 31, 1998 increased 14.8% to $105.9 million from $92.2 million recorded in
the comparable period a year ago. For the three months ended July 31, 1998, net
earnings and diluted earnings per share (excluding non-recurring charges and
other charges discussed below) were $4.9 million and $0.29, respectively,
compared to $4.6 million and $0.28, respectively, in the comparable period a
year ago. Taking into account the non-recurring charges and other charges
discussed below, net earnings (loss) and diluted earnings (loss) per share for
the three months ended July 31, 1998 were a loss of $17.8 million and $1.09,
respectively, compared to earnings of $4.6 million and $0.28, respectively, in
the comparable period a year ago.
Revenues for the six months ended July 31, 1998 increased 15.1% to $205.4
million compared to $178.5 million recorded in the same period a year ago. For
the six months ended July 31, 1998, net earnings and diluted earnings per share
(excluding non-recurring and other charges discussed below) were $8.5 million
and $0.49, respectively, compared to $7.8 million and $0.47, respectively,
generated in the same period a year ago. Taking into account the non-recurring
charges and other charges discussed below, net earnings (loss) and diluted
earnings (loss) per share for the six months ended July 31, 1998 were a loss of
$14.2 million and $0.87, respectively, compared to earnings of $7.8 million and
$0.47, respectively, in the comparable period a year ago.
During the three months ended July 31, 1998, the Company re-evaluated its
retail strategy in selected markers. As a result, the Company made the
determination to close certain retail locations and to write down the value of
certain retail assets. These non-recurring and other changes recognized by the
Company during the quarter totaled $33 million.
RISK FACTORS
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVES SIGNIFICANT RISKS.
PROSPECTIVE INVESTORS SHOULD GIVE CAREFUL ATTENTION TO THE FOLLOWING STATEMENTS
RESPECTING CERTAIN RISKS APPLICABLE TO THE OFFERING.
SUBSTANTIAL LEVERAGE
The Company has substantial indebtedness and, as a result, significant debt
service obligations. As of July 31, 1998, the Company had approximately $138
million of long-term debt. In addition, the indenture (the "Indenture") relating
to the Company's 9-1/4% Senior Subordinated Notes due 2007 (the "Notes") and the
Company's other debt instruments will allow the Company to incur additional
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indebtedness, including senior indebtedness or secured indebtedness in the
future subject to certain limitations set forth therein. As of August 15, 1998,
the Company had an aggregate of $40 million of available borrowings under its
senior credit facility. The Company's ability to make payments with respect to
the Notes and to satisfy its other debt obligations will depend upon its future
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond the
Company's control. Any inability of the Company to service its indebtedness may
result in the acceleration of some or all of the Company's indebtedness which
would have a material adverse effect upon the Company's financial condition.
The Company believes, based on current circumstances, that the Company's
cash flow, together with available borrowings under its senior credit facility
(as proposed to be amended), will be sufficient to service its debt requirements
as they become due for the foreseeable future. Significant assumptions underlie
this belief, including, among other things, that the Company will succeed in
implementing its business strategy and that there will be no material adverse
developments in the business, liquidity or capital requirements of the Company.
If the Company is unable to service its indebtedness, it will be required to
adopt alternative strategies, which may include actions such as reducing or
delaying capital expenditures, curtailing or eliminating the opening of
Company-owned stores, selling assets, restructuring or refinancing its
indebtedness or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all.
The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock, including: (i) the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions or general corporate purposes may be
impaired; (ii) a substantial portion of the Company's cash flows from operations
may be dedicated to the payment of principal and interest on its indebtedness,
thereby reducing the funds available to the Company for its operations; (iii)
certain of the Company's indebtedness contains financial and other restrictive
covenants, including those restricting the incurrence of additional
indebtedness, the creation of liens, the sale of assets, the ratio of total debt
to total capitalization, the ratio of total debt to earnings before interest,
taxes, depreciation, amortization and rental expense ("EBITDAR"), the ratio of
senior debt to EBITDAR and certain interest coverage ratios; (iv) certain of the
Company's borrowings are and will continue to be at variable rates of interest
which exposes the Company to the risk of greater interest rates; and (v) the
Company may be more leveraged than certain of its competitors, which may place
the Company at a relative competitive disadvantage and make the Company more
vulnerable to changing economic conditions.
GROWTH THROUGH ACQUISITION
As part of its operating history and growth strategy, the Company has
consummated and may seek to consummate the acquisition of other businesses. In
particular, the Company recently completed the acquisition of the residential
retail store assets of Shaw, which significantly expanded the Company's retail
network by adding 266 floorcovering stores, each operating under one of ten
brand names, including New York Carpet World, Carpetland USA or Carpet Exchange.
The Company continually seeks acquisition candidates in selected markets and
from time to time engages in exploratory discussions with suitable candidates.
There can be no assurance, however, that the Company will be able to identify
and acquire targeted businesses or obtain financing for such acquisitions on
satisfactory terms. The process of integrating acquired businesses into the
Company's operations may result in unforeseen difficulties and may require a
disproportionate amount of resources and management attention. In
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particular, as the Company expands its network of company-owned stores through
acquisitions, some of these acquired stores, although operating under different
brands, may be located in areas which fall within one or more CarpetMAX
franchisees' exclusive territories. The CarpetMAX franchisees affected by these
acquisitions may claim that the Company's expansion activities infringe on their
exclusive rights and/or constitute breaches of their CarpetMAX franchise
agreements. These claims could lead to CarpetMAX franchisees terminating their
franchise agreements, leaving the CarpetMAX franchise program and thus impacting
revenue received by the Company from these franchisees or commencing litigation
against the Company which would cause the Company to expend resources (financial
and otherwise) to defend these claims. In connection with future acquisitions,
the Company may incur significant charges to earnings as a result of, among
other things, restructuring charges. Future acquisitions may be financed through
the issuance of Common Stock, which may dilute the ownership of the Company's
shareholders, or through the incurrence of additional indebtedness. Furthermore,
there can be no assurance that competition for acquisition candidates will not
escalate, thereby increasing the costs of making acquisitions or making suitable
acquisitions unattainable.
LIMITED HISTORY OF OPENING AND OPERATING COMPANY-OWNED STORES; RISKS
ASSOCIATED WITH GALLERY STORE ROLL-OUT; MANAGEMENT OF GROWTH
The Company has only limited experience in the acquisition, construction and
direct management of Company-owned stores. The Company's growth and future
operating results depend principally on its ability to manage the newly-acquired
Shaw retail stores and to open and operate stores during the remainder of fiscal
1998 and fiscal 1999. The success of the Company's planned Gallery store
roll-out is dependent upon a number of factors including: (i) the availability
of new store locations in which the Company is not prohibited from opening
Company-owned stores pursuant to existing franchise agreements; (ii) the
negotiation of acceptable purchase or lease terms; (iii) the Company's financial
resources and its ability to control the operational aspects of its growth; and
(iv) the ability to hire, train and assimilate management and store-level
employees. The Company also competes for site locations with other businesses
which seek the same demographics and location characteristics. Moreover, the
Company may experience substantial delays in the opening of Company-owned
Gallery stores as well as increased expenses as a result of adverse weather
conditions and may experience substantial delays, increased expense or loss of
potential sites due to complexities associated with the regulatory and permit
processes. To the extent that the Company underestimates the cost to complete
the Gallery store roll-out or is unable to meet its contemplated opening
schedule and successfully integrate new Gallery stores into its ongoing
business, the Company's results of operations could be materially and adversely
affected. Although the Company believes that it can obtain suitable sites for
its projected Gallery store expansion and that its management and systems
controls will be adequate to support this growth, there can be no assurance that
the Company will be able to achieve the planned expansion on a timely basis, if
at all, that the Gallery store concept will be accepted in the marketplace or
that it will achieve planned operating results or results comparable with the
Company's existing CarpetMAX stores.
The Company's growth and future operating results also depend on its ability
to expand its carpet manufacturing capacity and add new franchisees. As part of
its growth, the Company intends to increase Image's annual fiber production
capacity from 100 million pounds to 150 million pounds by the end of calendar
1998. The Company may experience substantial delays in its planned manufacturing
expansion, as well as increased expenses associated with any unexpected
expansion costs. To the extent that the Company underestimates the cost of
expansion, the Company's results of operations could be materially adversely
affected. In addition, there can be no assurance that the Company will be able
to increase the number of franchisees or that new franchisees will be as
profitable to the Company as the existing franchisees.
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Additionally, the Company's growth and profitability will be significantly
dependent on the Company's ability to upgrade and integrate all of its
operations into a new management information system, accounting system, internal
control systems and purchasing systems. The inability of the Company to
accomplish such upgrades and integration on a timely basis or at all, could have
a material adverse effect on the successful operation of the Company's business,
implementation of its growth strategy and future operating strategy and future
operating results. The Company is currently developing a centralized information
system to integrate the Company's store operations and financial data. There can
be no assurance that the development of such information system will be
successful or accomplished within the anticipated time frame, if at all. If the
Company is unable to manage its growth effectively, the Company's business,
results of operations and financial condition could be materially adversely
affected.
HIGHLY COMPETITIVE NATURE OF THE FLOORCOVERING INDUSTRY
Competition in the retail floorcovering market is intense due to the
significant number of retailers. Large retailers also provide significant
competition, including the Home Depot, Inc., Lowe's Corporation and Sears,
Roebuck & Co. The principal methods of competition within the retail
floorcovering industry include store location, product selection and
merchandising, customer service and price.
The Company's carpet manufacturing business competes with other carpet
manufacturers and manufacturers of alternative floorcoverings such as wood or
tile. Certain of the Company's competitors in the carpet manufacturing business
have greater financial and other resources than the Company. According to Floor
Focus, an industry trade publication, the 10 largest carpet manufacturers
accounted for approximately 85% of total U.S. carpet shipments in 1996. No
assurance can be given that the Company's competitors will not substantially
increase resources devoted to the production and marketing of products
competitive with those of the Company, which could require the Company to reduce
prices or increase spending on product development, marketing and sales, any of
which could have a material adverse effect on the Company.
FLUCTUATIONS IN QUARTERLY RESULTS, SEASONALITY AND CYCLICAL NATURE OF THE
FLOORCOVERING INDUSTRY
The Company's quarterly operating results have fluctuated in the past and
are expected to fluctuate in the future as a result of a variety of factors,
including the timing of store openings and related pre-opening expenses, weather
conditions, price increases by suppliers, actions by competitors, conditions in
the carpet manufacturing, home building and improvement markets and the
floorcovering industry in general, regional and national economic conditions and
other factors. Moreover, the Company expects its business to continue to exhibit
some measure of seasonality, which the Company believes is typical of the
floorcovering industry. Individual stores generally experience lower net sales,
operating income and cash flow from operations and the Company experiences lower
sales of manufactured carpets in the first and fourth fiscal quarters than in
the second and third fiscal quarters, due primarily to the effects of winter
weather on home construction and improvement projects.
The floorcovering industry historically has been adversely impacted by
economic downturns. The Company believes that the industry is significantly
influenced by economic conditions generally and particularly by consumer
behavior, consumer confidence, the level of personal discretionary spending, the
condition of the residential and commercial construction industries, interest
rates, credit availability
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and the overall strength of the economy. There can be no assurance that a
prolonged economic downturn would not have a material adverse effect on the
Company.
DEPENDENCE ON SENIOR MANAGEMENT
The success of the Company is largely dependent on the skills, experience
and efforts of its senior management and especially its President and Chief
Executive Officer, A.J. Nassar, and its Chief Operating Officer, David E.
Cicchinelli. The loss of the services of Mr. Nassar, Mr. Cicchinelli or other
members of the Company's senior management could have a material adverse effect
on the Company's business and prospects. The Company has entered into an
employment agreement with Mr. Nassar and maintains a key man life insurance
policy on Mr. Nassar in the amount of $2.0 million. The Company believes that
its future success will also depend in part upon its ability to attract, retain
and motivate qualified personnel. Competition for such personnel is intense.
Although the Company has recently hired several senior level management
personnel with extensive retail experience, there can be no assurance that the
Company will continue to be successful in attracting and retaining such
personnel.
RISKS ASSOCIATED WITH PRICE AND AVAILABILITY OF RAW MATERIALS
The availability of low cost materials, particularly post-consumer PET
bottles, is important to the profitability of the Company's manufacturing
operations. An increase in the demand for post-consumer PET bottles could
increase prices for PET bottles, thereby increasing the Company's manufacturing
costs. Such increased costs could have an adverse effect on the profitability of
the Company's manufacturing operations. In recent years, post consumer PET
bottle prices have fluctuated dramatically, most notably in fiscal 1996 when
prices increased 150% and subsequently returned to historical price levels.
There can be no assurance that such prices will not continue to experience
significant volatility. In addition, the Company plans to expand its fiber
production capacity, which will increase its requirements for PET bottles by up
to approximately 40%. The unavailability, scarcity or increased cost of such raw
materials could disrupt the Company's manufacturing operations which would have
a material adverse effect on these operations. In addition, any significant
change in the proportion of PET in the waste bottles supplied to the Company's
manufacturing operations, or the introduction of alternatives to PET bottles for
food packaging, could also disrupt the Company's manufacturing operations and
have a material adverse effect on the Company. Any decrease in the profitability
of the manufacturing operations would have an adverse effect on the Company's
overall results of operations.
DEPENDENCE ON SUPPLIERS FOR FLOORCOVERING PRODUCTS AND DISTRIBUTION
The Company's retail network relies on several large independent
floorcovering manufacturers for the production of floorcovering products. These
manufacturers include Shaw and Mohawk Industries, Inc. which together supplied
in excess of 50% of the Company's floorcovering purchases for the twelve months
ended July 31, 1998. In addition, the Company's retail inventory management is
highly dependent on the delivery capabilities of these manufacturers. Any
significant change in the Company's relationships with these manufacturers, or
in the manner in which these manufacturers produce or distribute their products,
could have a material adverse effect on the Company. Although these
manufacturers have been reliable, high quality producers, there can be no
assurance that in the future these manufacturers will be willing or able to meet
the Company's requirements and those of its franchisees on a timely basis or
that their pricing and rebate policies will remain competitive. While the
Company believes there are a number of alternative manufacturers capable of
supplying and distributing
-9-
<PAGE> 11
the Company's floorcovering products, any delays in obtaining alternative
suppliers could have a material adverse effect of the Company's operations and
those of its franchisees. In addition, the Company expects that suppliers will
contribute to the opening expenses of new Gallery stores. However, there can be
no assurance that these suppliers will contribute to such expenses and, to the
extent that they do not, the Company's ability to maintain its Gallery store
roll-out may be adversely affected.
ENVIRONMENTAL AND REGULATORY MATTERS
The Company's operations and facilities are subject to numerous federal,
state and local laws and regulations designed to protect the environment from
wastes and emissions of hazardous substances and to provide a safe workplace for
the Company's employees. The Company believes that it is either in material
compliance with all currently applicable laws and regulations or is operating in
accordance with appropriate variances or similar arrangements. The Company
believes that compliance with current laws and regulations will not require
significant capital expenditures or have a material adverse effect on its
operations. However, such laws and regulations are subject to change in the
future, and any failure by the Company to comply with present or future
regulations could subject it to future liabilities or the suspension of
production which could have a material adverse effect on the Company's business.
In addition, changes in environmental regulations could restrict the Company's
ability to expand its facilities or could require the Company to incur
substantial unexpected other expenses to comply with such regulations.
The Company is subject to federal regulations and state laws that regulate
the offer and sale of franchisees and the franchisor-franchisee relationship.
The Company is not aware of any pending franchise legislation which in its view
is likely to have a material adverse effect on the operations of the Company.
The Company is aware, however, that various legislative proposals have been or
are being debated at both the state and federal levels which could result in new
laws regulating the offer and sale of franchises and other aspects of the
franchisor-franchisee relationship. It is possible that such legislation, if
enacted, could aversely affect the Company's franchise operations.
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer programs written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
Based on the assessment of the Company's information technology personnel,
management presently believes that with the planned conversion to new software
and hardware and the planned modifications to existing software and hardware,
the affect of the Year 2000 issue will be mitigated. All costs associated with
analyzing the Year 2000 issue or making conversions to existing software are
being expensed as incurred. The Company is planning formal communications with
all of its significant suppliers of goods and services to determine the extent
to which the Company's operations and systems are vulnerable to those third
parties' failure to remediate their own Year 2000 issues. There can be no
guarantee that the systems of other companies on which the Company's operations
and systems rely will be timely converted and would not have an adverse effect
on the Company's results of operations.
-10-
<PAGE> 12
The Company will utilize predominantly internal resources to reprogram, or
replace, and test the Company's software for Year 2000 compliance by June 1999,
which is prior to any anticipated impact on its operating systems. Management
has not estimated a total cost of the Year 2000 issues; however, such costs are
not expected to have a material effect on the results of operations during any
quarterly or annual reporting period. Any failure of the Company's computer
system or the systems of third parties to achieve Year 2000 compliance on a
timely basis could have a material adverse effect on the Company's business,
financial condition and results of operations.
INDOOR AIR QUALITY
The effect of carpet and other floorcovering products on indoor air quality
has been the subject of debate in recent years. Although it is uncertain whether
emissions from carpet pose a health hazard, there can be no assurance that
researchers will not detect hazardous levels of emissions from carpet. The
discovery of adverse health effects resulting from carpet, or the public
perception thereof, could have a material adverse effect on the Company's
operations and those of its franchisees.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Indenture governing the terms of the Notes contains certain covenants
limiting, subject to certain exceptions, the incurrence of additional
indebtedness, the payment of dividends, the redemption of capital stock, the
making of certain investments, the issuance of capital stock of subsidiaries,
the creation of liens and other restrictions affecting the Company's
subsidiaries, the issuance of guarantees, transactions with affiliates, asset
sales and certain mergers and consolidations. A breach of any of these covenants
could result in an event of default under the Indenture. In addition, the
Company's senior credit facility contains other restrictive covenants and
requires the Company to satisfy certain financial tests, including maintaining
certain ratios relating to levels of total debt, consolidated senior debt, and
EBITDAR (as defined herein). The Company's ability to comply with such
covenants and to satisfy such financial tests may be affected by events beyond
its control. A breach of any of these covenants could result in an event of
default under the senior credit facility and the Indenture. In the event of a
default under the senior credit facility, the lenders thereunder could elect to
declare all amounts borrowed, together with accrued interest, to be immediately
due and payable, and the lenders under the senior credit facility could
terminate all commitments thereunder and, if such borrowed amounts are not paid,
enforce their rights pursuant to the security interests on, or commence
litigation that could ultimately result in a sale of, certain assets of the
Company. In addition, a default under the senior credit facility could
constitute a cross-default under the Indenture, and a default under the
Indenture could constitute a cross-default under the senior credit facility.
POTENTIAL FAILURE TO MAKE PAYMENT UNDER A CHANGE OF CONTROL
Upon the occurrence of a Change of Control (as defined in the Indenture),
each holder of the Notes may require the Company to purchase all or a portion of
such holder's Notes at 101% of the principal amount of the Notes, together with
accrued and unpaid interest, if any, to the date of purchase. In such
circumstances, the Company may be required to (i) repay all or a portion of the
outstanding principal of, and pay any accrued interest on, its senior
indebtedness, or (ii) obtain any requisite consent from its lenders to permit
the purchase. If the Company is unable to repay all of such indebtedness or is
unable to obtain the necessary consents, the Company may be unable to offer to
purchase the Notes, which will constitute an event of default under the
Indenture. There can be no assurance that the
-11-
<PAGE> 13
Company will have sufficient funds at the time of any Change of Control to make
any debt payment (including purchases of Notes) as described above or that the
Company will be able to refinance its outstanding indebtedness in order to
permit it to repurchase the Notes or, if such refinancing were to occur, that
such financing will be on terms favorable to the Company.
The events that constitute a Change of Control under the Indenture may also
be events of default under the senior credit facility or other senior
indebtedness of the Company. Such events may permit the holders under such debt
instruments to reduce the borrowings thereunder or accelerate the debt and, if
the debt is not paid, to enforce their rights pursuant to security interests on,
or commence litigation that could ultimately result in a sale of, certain assets
of the Company, thereby limiting the Company's ability to purchase the Notes.
ANTI-TAKEOVER PROVISIONS
The Company's Certificate of Incorporation, as amended ("the Certificate of
Incorporation"), contains provisions requiring supermajority stockholder
approval to effect certain extraordinary corporate transactions which are not
approved by the Board of Directors. These provisions make it more difficult to
effect a merger, sale of control or similar transaction involving the Company
even though a majority of the Company's stockholders may vote in favor of such a
transaction. The Company is also subject to the provisions of Section 203 of the
Delaware General Corporation Law, which may have the effect of delaying,
deferring, or preventing a change in control of the Company by limiting
transactions between the Company and "interested stockholders" (generally, those
stockholders who, together with their affiliates and associates, own 15% or more
of a company's outstanding capital stock). In addition, the Company's
Certificate of Incorporation includes a number of additional anti-takeover
provisions which, among other things, require a staggered Board of Directors,
limit the ability of stockholders to call special meetings, eliminate
stockholder action by unanimous consent, restrict the ability of the
stockholders to amend certain provisions of the Certificate of Incorporation,
permit the Board of Directors to amend the Bylaws without stockholder consent
and authorize the issuance of up to 1,000,000 shares of preferred stock,
issuable in series, the relative rights and preferences of which may be
designated by the Board of Directors. The effect of these provisions is to make
it more difficult to effect a change in control of the Company through the
acquisition of a large block of the Company's Common Stock and may have the
effect of encouraging persons considering unsolicited tender offers or other
unilateral takeover proposals to negotiate with the Company's Board of Directors
rather than pursue non-negotiated takeover attempts.
VOLATILITY OF STOCK PRICE
The market price of the Common Stock could be subject to significant
fluctuations in response to the Company's operating results and other factors,
and there can be no assurance that the market price of the Common Stock will not
decline below current levels. Developments in the floorcovering industry or
changes in general economic conditions could adversely affect the market price
of the Common Stock. In addition, the stock market has from time to time
experienced extreme price and volume volatility. These fluctuations may be
unrelated to the operating performance of particular companies whose shares are
traded and may adversely affect the market price of the Common Stock.
-12-
<PAGE> 14
USE OF PROCEEDS
The Company will not receive any of the cash proceeds from the sale of
shares of the Common Stock by the Selling Shareholder. See "Selling Shareholder"
for information regarding the Selling Shareholder.
SELLING SHAREHOLDER
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 1, 1998 by the
shareholder of the Company who is offering securities pursuant to this
Prospectus (the "Selling Shareholder"). "Beneficial Ownership" includes shares
for which an individual, directly or indirectly, has or shares voting or
investment power or both. The listed person has sole voting and investment power
over the shares listed opposite its name.
<TABLE>
<CAPTION>
Before the Offering After the Offering (1)
--------------------------------- ------------------------
Number Securities to Number
Name of Beneficial Beneficially Percent Be Sold Beneficially Percent
Owner Owned Of Class in Offering Owned of Class
- ------------------ ------------------- -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Shaw Industries, Inc. 3,150,000 16.4% 3,150,000 0 0
616 East Walnut Avenue
Dalton, Georgia 30720
</TABLE>
- -------------------
(1) Assumes that all the shares of Common Stock covered hereby will be sold
by the Selling Shareholder in the offering and that the Selling
Shareholder does not acquire any additional shares during the offering.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock of $.001 par value and 1,000,000 shares of Preferred Stock of $.001
par value, issuable in series, the relative rights and preferences of which may
be designated by the Board of Directors.
COMMON STOCK
Each record holder of Common Stock is entitled to one vote for each share
held on all matters properly submitted to the stockholders for their vote.
Cumulative voting for the election of directors is not permitted by the
Certificate of Incorporation. Holders of outstanding Common Shares are entitled
to those dividends declared by the Board of Directors out of legally available
funds; and, in the event of liquidation, dissolution, or winding up of the
affairs of the Company, holders are entitled to receive, ratably, the net assets
of the Company available to holders of Common Shares after distribution is made
to the preferred stockholders (see "Preferred Stock," below). Holders of
outstanding Common Shares have no preemptive, conversion, or redemptive rights.
All of the issued and outstanding Common Shares are duly authorized, validly
issued, fully paid, and nonassessable.
-13-
<PAGE> 15
PREFERRED STOCK
The Company is authorized to issue up to 1,000,000 shares of $.00l par value
Preferred Stock, none of which is outstanding. The Board of Directors has the
power, without further action by the stockholders, to divide any and all shares
of Preferred Stock into series and to fix and determine the relative rights and
preferences of the Preferred Stock, such as the designation of series and the
number of shares constituting such series, dividend rights, redemption and
sinking fund provisions, liquidating and dissolution preferences, conversion or
exchange rights and voting rights, if any. Issuances of Preferred Stock by the
Board of Directors may result in such shares having senior dividend and/or
liquidation preferences to the holders of shares of Common Stock and may dilute
the voting rights of such holders. Issuances of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting
rights of holders of the Common Stock. In addition, the issuance of Preferred
Stock could make it more difficult for a third party to acquire a majority of
the outstanding voting stock. Accordingly, the issuance of Preferred Stock may
be used as an "anti-takeover" device without further action on the part of the
stockholders of the Company. The Company has no present plans to issue any
shares of Preferred Stock.
TRANSFER AGENT
Wachovia Bank, N.A. acts as the Transfer Agent for the Common Shares of the
Company.
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby for the benefit of the Selling
Shareholder were originally issued by the Company pursuant to the private
placement exemption from registration provided in Sections 3(b) and/or 4(2) of
the Securities Act of 1933, as amended. The Company has agreed to register the
shares for resale by the Selling Shareholder. The Company will not receive any
of the proceeds from the sale of such shares by the Selling Shareholder.
The Common Stock may be sold from time to time by the Selling Shareholder,
or by pledgees, donees, transferees or other successors in interest. Such sales
may be made on the New York Stock Exchange at prices and at terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions. Accordingly, sales prices and proceeds to the Selling
Shareholder will depend upon market price fluctuations and the manner of sale.
The shares may be sold by one or more of the following, without limitation: (a)
a block trade in which the broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction, (b) purchases by a broker or dealer as principal
and resale by such broker or dealer or for its account pursuant to the
Prospectus, as supplemented, (c) an exchange distribution in accordance with the
rules of such exchange, and (d) ordinary brokerage transactions and transactions
in which the broker solicits purchasers. In addition, any securities covered by
the Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to the Prospectus, as supplemented. From time to
time the Selling Shareholder may engage in short sales, short sales against the
box, puts and calls and other transactions in securities of the Company or
derivatives thereof, and may sell and deliver the shares in connection
therewith.
From time to time the Selling Shareholder may pledge its shares pursuant to
the margin provisions of any customer agreements with its brokers. Upon a
default by the Selling
-14-
<PAGE> 16
Shareholder, the broker may offer and sell the pledged shares of Common Stock
from time to time as described hereunder.
The Selling Shareholder may effect transactions by selling to or through one
or more broker dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, brokerage commissions or similar fees in amounts
which may vary from transaction to transaction. The Selling Shareholder will pay
such brokerage commissions and charges. The Company will bear all other expenses
in connection with registering the shares offered hereby, which expenses are
estimated to total approximately $30,000.
Pursuant to a certain Agreement and Plan of Merger, dated August 13, 1998,
among Shaw, its wholly owned subsidiary, Chessman Acquisition Corp., Queen
Carpet Corporation ("Queen") and the shareholders of Queen (the "Queen
Shareholders"), Shaw, at its option, is entitled to pay a portion of the merger
consideration by means of delivery to the Queen Shareholders of the 3,150,000
shares of Common Stock of the Company currently owned by Shaw.
The Selling Shareholder has advised the Company that it has not entered
into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares offered hereby.
LEGAL MATTERS
Certain legal matters with respect to the legality of the shares of Common
Stock offered hereby have been passed upon for the Company by Smith, Gambrell &
Russell, LLP, Atlanta, Georgia.
EXPERTS
The consolidated financial statements and schedules of the Company as of
January 31, 1998 and 1997, for the fiscal years ended January 31, 1998 and 1997
and for the ten months ended January 31, 1996, and the financial statements of
The Maxim Group 401(k) Plan as of December 31, 1997 and March 31, 1997 and for
the nine months ended December 31, 1997, incorporated by reference in this
Prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in giving said reports.
-15-
<PAGE> 17
================================================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information .................................................... 2
Incorporation of Certain Documents by Reference .......................... 2
Cautionary Notice Regarding Forward-Looking Statements ................... 3
The Company .............................................................. 4
Risk Factors ............................................................. 5
Use of Proceeds .......................................................... 13
Selling Shareholder ...................................................... 13
Description of Securities ................................................ 13
Plan of Distribution ..................................................... 14
Legal Matters ............................................................ 15
Experts .................................................................. 15
</TABLE>
================================================================================
================================================================================
THE MAXIM GROUP, INC.
3,150,000 SHARES
COMMON STOCK
P R O S P E C T U S
SEPTEMBER , 1998
--
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
(770) 590-9369
================================================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are estimates of the fees and expenses payable by the
Company in connection with the offer and sale of the Common Stock:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee...................... $16,987
Legal Fees and Expenses................... 5,000
Accounting Fees and Expenses.............. 2,000
Transfer Agent Fees....................... 500
Printing, Materials, and Postage.......... 1,500
Miscellaneous Expenses.................... 4,013
-------
Total............................ $30,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation provides for indemnification
of directors and officers of the Registrant to the full extent permitted by
Delaware law.
Section 145 of the General Corporation Law of the State of Delaware
provides generally that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at its request in
such capacity in another corporation or business association, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
In addition, pursuant to the authority of Delaware law, the Certificate of
Incorporation of the Registrant also eliminates the monetary liability of
directors to the fullest extent permitted by Delaware law.
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
---------- ----------------------
<S> <C>
5.1 -Opinion of Smith, Gambrell & Russell, LLP
23.1 -Consent of Arthur Andersen LLP
23.2 -Consent of Smith, Gambrell & Russell, LLP (contained in their
opinion filed as Exhibit 5.1 hereto)
24.1 -Powers of Attorney (contained on signature page to this Registration
Statement)
</TABLE>
II-1
<PAGE> 19
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referred to in Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is therefore unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Kennesaw, State of Georgia, on the 20th day of August,
1998.
THE MAXIM GROUP, INC.
By: /s/ A.J. Nassar
------------------------------
A.J. Nassar
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints A.J. Nassar and Thomas P. Leahey and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him, in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, including a
Registration Statement filed under Rule 462(b) of the Securities Act of 1933, as
amended, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
as fully and to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ A.J. Nassar President, Chief Executive Officer August 20, 1998
- ----------------------------- and Director (principal executive
A.J. Nassar officer)
/s/ Thomas P. Leahey Executive Vice President, Finance August 20, 1998
- ----------------------------- and Treasurer (principal financial
Thomas P. Leahey officer)
/s/ Gary Brugliera Executive Vice President, Chief August 20, 1998
- ----------------------------- Financial Officer and Secretary
Gary Brugliera (principal accounting officer)
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
- --------------------------- Director August __, 1998
James W. Inglis
/s/ David E. Cicchinelli Chief Operating Officer August 20, 1998
- --------------------------- and Director
David E. Cicchinelli
/s/ Richard A. Kaplan Director August 20, 1998
- ---------------------------
Richard A. Kaplan
/s/ J. Michael Nixon Director August 20, 1998
- ---------------------------
J. Michael Nixon
/s/ H. Stanley Padgett Executive Vice President August 20, 1998
- --------------------------- and Director
H. Stanley Padgett
/s/ M.B. Seretean Chairman of the Board August 20, 1998
- ---------------------------
M.B. Seretean
/s/ Herb Wolk Director August 20, 1998
- ---------------------------
Herb Wolk
</TABLE>
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<S> <C>
5.1 Opinion of Smith, Gambrell & Russell, LLP
23.1 Consent of Arthur Andersen LLP
</TABLE>
<PAGE> 1
SMITH, GAMBRELL & RUSSELL, LLP
ATTORNEYS AT LAW
Telephone SUITE 3100, PROMENADE II WEBSITE
(404) 815-3500 1230 PEACHTREE STREET, N.E. WWW.SGRATL.COM
Facsimile ATLANTA, GEORGIA 30309-3592
(404) 815-3509
--------------
ESTABLISHED 1893
August 27, 1998
EXHIBIT 5.1
Board of Directors
The Maxim Group, Inc.
210 TownPark Drive
Kennesaw, Georgia 30144
RE: The Maxim Group, Inc.
Registration Statement on Form S-3
3,150,000 Shares of Common Stock
Gentlemen:
We have acted as counsel for The Maxim Group, Inc. (the "Company") in
connection with the proposed public offering by a holder of shares (the
"Selling Shareholder") of the Company's $.001 par value Common Stock (the
"Common Stock") covered by the above-described Registration Statement.
In connection therewith, we have examined the following:
(1) The Certificate of Incorporation of the Company, as amended,
certified by the Secretary of State of the State of Delaware;
(2) The By-Laws of the Company, as amended, certified as correct and
complete by the Secretary of the Company;
(3) The minute book of the Company, certified as correct and complete by
the Secretary of the Company; and
(4) The Registration Statement on Form S-3 to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, relating to the sale of up to 3,150,000 shares
of Common Stock (the "Registration Statement").
<PAGE> 2
Board of Directors
August 27, 1998
Page 2
Based upon such examination and upon examination of such other instruments
and records as we have deemed necessary, we are of the opinion that the
3,150,000 shares of Common Stock covered by said Registration Statement to be
sold by the Selling Shareholder referenced therein have been legally
authorized by the Company and, when sold in accordance with the terms described
in the Registration Statement, will be legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to this firm under the caption "Legal Matters"
in the Prospectus contained in said Registration Statement. In giving this
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Robert T. Molinet
Robert T. Molinet
RTM:jm
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated April 2, 1998
included in The Maxim Group, Inc.'s Annual Report on Form 10-K for the fiscal
year ended January 31, 1998 and our report dated June 24, 1998 on the financial
statements of The Maxim Group 401(K) Plan for the nine months ended December
31, 1997 included in The Maxim Group, Inc.'s Amendment No. 1 on Form 10-K/A
dated June 26, 1998 to its Annual Report on Form 10-K for the fiscal year ended
January 31, 1998 and to all references to our firm included in this Registration
Statement and related Prospectus.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 3, 1998
