Exhibit 10.23
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CREDIT AGREEMENT
dated as of August 26, 1997
by and among
THE MAXIM GROUP, INC.
and
Certain of its Subsidiaries
as Borrowers,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
NATIONSBANK, N.A.
as Documentation Agent,
and
Fleet National Bank,
as Co-Agent
220769.13
CREDIT AGREEMENT
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
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.................................................................................................................1
SECTION 1.1 Definitions..........................................................................................1
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SECTION 1.2 General.............................................................................................18
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SECTION 1.3 Accounting Matters..................................................................................18
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SECTION 1.4 Other Definitions and Provisions....................................................................18
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ARTICLE II
CREDIT FACILITY
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................................................................................................................19
SECTION 2.1 Revolver Loans......................................................................................19
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SECTION 2.2 Procedure for Advances of Revolver Loans............................................................19
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SECTION 2.3 Swingline Loan Subfacility..........................................................................20
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SECTION 2.4 Repayment of Revolver Loans.........................................................................22
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SECTION 2.5 Letters of Credit...................................................................................22
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SECTION 2.6 Term Loan...........................................................................................28
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SECTION 2.7 Notes...............................................................................................29
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SECTION 2.8 Termination of Revolver Facility....................................................................30
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SECTION 2.9 Use of Proceeds.....................................................................................30
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SECTION 2.10 Security...........................................................................................30
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SECTION 2.11 Maximum Borrower Liability.........................................................................30
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SECTION 2.12 Waiver of Subrogation..............................................................................32
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ARTICLE III
GENERAL LOAN PROVISIONS
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................................................................................................................32
SECTION 3.1 Interest............................................................................................32
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SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans............................................35
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SECTION 3.3 Fees................................................................................................36
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SECTION 3.4 Manner of Payment...................................................................................37
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SECTION 3.5 Crediting of Payments and Proceeds..................................................................38
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SECTION 3.6 Nature of Obligations of Lenders Regarding Loans; Assumption by Administrative Agent................38
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SECTION 3.7 Changed Circumstances...............................................................................39
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SECTION 3.8 Indemnity...........................................................................................40
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SECTION 3.9 Capital Requirements................................................................................41
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SECTION 3.10 Taxes..............................................................................................41
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ARTICLE IV
CLOSING: CONDITIONS OF CLOSING AND BORROWING
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................................................................................................................43
SECTION 4.1 Closing.............................................................................................43
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SECTION 4.2 Conditions to Closing and Initial Loan..............................................................43
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SECTION 4.3 Conditions to All Loans and Issuance of Conventional Letters of Credit..............................47
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SECTION 4.4 Conditions to Issuance of Special Purpose Letter of Credit..........................................47
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BORROWERS
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................................................................................................................48
SECTION 5.1 Representations and Warranties......................................................................48
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SECTION 5.2 Survival of Representations and Warranties, Etc.....................................................54
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ARTICLE VI
FINANCIAL INFORMATION AND NOTICES
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................................................................................................................54
SECTION 6.1 Financial Statements and Projections................................................................55
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SECTION 6.2 Officer's Compliance Certificate....................................................................55
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SECTION 6.3 Accountants' Certificate............................................................................56
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SECTION 6.4 Borrowing Base Certificate..........................................................................56
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SECTION 6.5 Other Reports.......................................................................................56
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SECTION 6.6 Notice of Litigation and Other Matters..............................................................57
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SECTION 6.7 Accuracy of Information.............................................................................58
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ARTICLE VII
AFFIRMATIVE COVENANTS
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................................................................................................................58
SECTION 7.1 Preservation of Corporate Existence and Related Matters.............................................58
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SECTION 7.2 Maintenance of Property.............................................................................58
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SECTION 7.3 Insurance...........................................................................................58
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SECTION 7.4 Accounting Methods and Financial Records............................................................59
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SECTION 7.5 Payment and Performance of Obligations..............................................................59
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SECTION 7.6 Compliance With Laws and Approvals..................................................................59
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SECTION 7.7 Environmental Laws..................................................................................59
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SECTION 7.8 Compliance with ERISA and the Code..................................................................59
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SECTION 7.9 Compliance With Agreements..........................................................................60
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SECTION 7.10 Conduct of Business................................................................................60
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220769.13
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SECTION 7.11 Visits and Inspections.............................................................................60
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SECTION 7.12 Subsidiaries.......................................................................................60
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SECTION 7.13 Further Assurances.................................................................................60
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ARTICLE VIII
FINANCIAL COVENANTS
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................................................................................................................61
SECTION 8.1 Total Debt to Total Capitalization..................................................................61
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SECTION 8.2 Total Debt to EBITDAR..............................................................................61
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SECTION 8.3 Senior Debt to EBITDAR..............................................................................61
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SECTION 8.4 Interest Coverage Ratio.............................................................................61
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ARTICLE IX
NEGATIVE COVENANTS
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................................................................................................................61
SECTION 9.1 Limitations on Debt.................................................................................61
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SECTION 9.2 Limitations on Contingent Obligations...............................................................62
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SECTION 9.3 Limitations on Liens................................................................................62
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SECTION 9.4 Limitations on Loans, Advances, Investments and Acquisitions........................................62
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SECTION 9.5 Limitations on Mergers and Liquidation..............................................................64
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SECTION 9.6 Limitations on Sale of Assets.......................................................................64
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SECTION 9.7 Transactions with Affiliates........................................................................65
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SECTION 9.8 Certain Accounting Changes..........................................................................65
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SECTION 9.9 Licenses............................................................................................65
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SECTION 9.10 Restrictive Agreements.............................................................................65
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ARTICLE X
DEFAULT AND REMEDIES
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................................................................................................................66
SECTION 10.1 Events of Default..................................................................................66
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SECTION 10.2 Remedies...........................................................................................68
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SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc....................................................69
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SECTION 10.4 Set-off............................................................................................69
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SECTION 10.5 Adjustments........................................................................................69
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SECTION 10.6 Consents...........................................................................................70
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ARTICLE XI
AGENTS
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................................................................................................................70
220769.13
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SECTION 11.1 Appointment........................................................................................70
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SECTION 11.2 Nature of Duties...................................................................................70
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SECTION 11.3 Exculpatory Provisions.............................................................................71
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SECTION 11.4 Reliance by Administrative Agent...................................................................71
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SECTION 11.5 Non-Reliance on Administrative Agent and Other Lenders.............................................72
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SECTION 11.6 Notice of Default..................................................................................72
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SECTION 11.7 Indemnification....................................................................................72
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SECTION 11.8 The Administrative Agent in its Individual Capacity................................................73
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SECTION 11.9 Successor Administrative Agent.....................................................................73
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ARTICLE XII
MISCELLANEOUS
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................................................................................................................74
SECTION 12.1 Notices............................................................................................74
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SECTION 12.2 Expenses...........................................................................................75
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SECTION 12.3 Governing Law......................................................................................75
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SECTION 12.4 Consent to Jurisdiction............................................................................76
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SECTION 12.5 WAIVER OF JURY TRIAL...............................................................................76
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SECTION 12.6 Reversal of Payment................................................................................76
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SECTION 12.7 Injunctive Relief..................................................................................76
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SECTION 12.8 Successors and Assigns; Participations.............................................................76
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SECTION 12.9 Amendments, Waivers and Consents; Renewal..........................................................79
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SECTION 12.10 Performance of Duties.............................................................................80
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SECTION 12.11 Indemnification...................................................................................80
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SECTION 12.12 All Powers Coupled with Interest..................................................................80
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SECTION 12.13 Survival of Indemnities...........................................................................80
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SECTION 12.14 Provision of Loan Documents.......................................................................80
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SECTION 12.15 Titles and Captions...............................................................................80
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SECTION 12.16 Severability of Provisions........................................................................80
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SECTION 12.17 Counterparts......................................................................................81
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SECTION 12.18 Maxim as Agent for Other Borrowers................................................................81
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SECTION 12.19 Term of Agreement.................................................................................81
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220769.13
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EXHIBITS
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Exhibit A-1 - Form of Revolver Note
Exhibit A-2 - Form of Term Note
Exhibit A-3 - Form of Swingline Note
Exhibit B1 - Form of Notice of Borrowing
Exhibit B2 - Form of Swingling Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Assignment and Acceptance
Exhibit F1 - Form of Pledge Agreement - Maxim
Exhibit F2 - Form of Pledge Agreement - GCO, Inc.
Exhibit F3 - Form of Pledge Agreement - Maxim Retail Group, Inc.
Exhibit F4 - Form of Pledge Agreement - ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Interiors, Inc.
Exhibit G - Form of Security Agreement
Exhibit H - Form of Intercompany Subordination Agreement
Exhibit I - Form of Joinder Agreement
Exhibit J - Form of Reimbursement Agreement
Exhibit K - Form of Assignment for Security
Exhibit L - Form of Borrowing Base Certificate
Exhibit M - Form of Notice of Prepayment
SCHEDULES
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Schedule 1.1 - Lenders and Commitments
Schedule 5.1(a) - Jurisdictions of Organization and Qualification to Do
Business as Foreign Corporation
Schedule 5.1(b) - Subsidiaries and capitalization
Schedule 5.1(d) - Governmental Approvals
Schedule 5.1(g) - Environmental Matters
Schedule 5.1(h) - ERISA Plans
Schedule 5.1(k) - Litigation regarding Patens, Copyrights and Trademarks
Schedule 5.1(1) - Material Contracts
Schedule 5.1(m) - Labor and Collective Bargaining Agreements
Schedule 5.1(o) - Liabilities Not Reflected in Financial Statements
Schedule 5.1(r) - Real Property
Schedule 5.1(t) - Debt and Contingent Obligations
Schedule 5.1(u) - Litigation
Schedule 9.1 - Existing Debt
Schedule 9.3 - Existing Liens
Schedule 9.4 - Existing Loans, Advances and Investments
220769.13
v
CREDIT AGREEMENT, dated as of the 26th day of August, 1997, by and among
THE MAXIM GROUP, INC., a corporation organized under the laws of Delaware
("Maxim"), certain other Subsidiaries of Maxim identified on the signature pages
hereto (together with Maxim, the "Borrowers"), the financial institutions who
are or may become party hereto (the "Lenders"), FIRST UNION NATIONAL BANK, a
national banking association ("First Union"), as Administrative Agent for the
Lenders, NATIONSBANK, N.A. ("NationsBank"), as Documentation Agent, and Fleet
National Bank ("Fleet"), as Co-Agent.
STATEMENT OF PURPOSE
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The Borrowers have requested that First Union and the Lenders provide the
credit facilities hereunder. The parties have agreed that the credit facilities
are to be governed by the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
covenants and provisions herein contained and for TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders, First Union, NationsBank and Fleet
hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 Definitions. In addition to the terms defined above and the
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terms defined elsewhere herein, the following terms when used in this Agreement
shall have the meanings assigned to them below:
"Accounts Designation Letter" means the letter executed by each of the
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Borrowers, delivered on the date hereof and from time to time thereafter,
designating the accounts of Maxim or the other Borrowers to which proceeds of
Revolver Loans are to be disbursed and authorizing the Administrative Agent to
disburse such proceeds to such accounts.
"Administrative Agent" means First Union in its capacity as administrative
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agent hereunder, and any successor thereto appointed pursuant to Section 11.9.
"Administrative Agent's Office" means the office of the Administrative
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Agent specified in or determined in accordance with the provisions of Section
12.1.
"Affiliate" means, with respect to any Person, any other Person (other than
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a Subsidiary of such Person) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person. The term "control" means (a) the power to vote ten percent (10%)
or more of the securities or other equity interests of a Person having
ordinary voting power, or (b) the possession, directly or indirectly, of any
other power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agents" means, collectively, the Administrative Agent, the Documentation
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Agent and the Co-Agent.
"Aggregate Commitments" means the aggregate amount of the Issuing Bank's
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and Lenders' Commitments hereunder, as such amount may be reduced at any time or
from time to time pursuant to this Agreement. On the Closing Date, the
Aggregate Commitments shall be One Hundred Thirty Million Dollars
($130,000,000).
"Agreement" means this Credit Agreement, as amended or supplemented from
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time to time.
"Aircraft Chattel Mortgage" means the Aircraft Chattel Mortgage and
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Security Agreement dated as of the date hereof, by Maxim in favor of the
Administrative Agent for the benefit of itself and the Lenders, as amended,
modified or supplemented from time to time.
"Applicable Law" means all applicable provisions of constitutions, laws,
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statutes, treaties, rules, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
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3.1(a).
"Assignment and Acceptance" shall have the meaning assigned thereto in
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Section 12.9(a).
"Avoidance Provisions" shall have the meaning assigned thereto in Section
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2.11(a).
"Bankruptcy Code" means the U.S. Bankruptcy Code, 11 U.S.C. (S) 101 et
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seq., as amended.
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"Base Rate" means, at any time, the higher of (a) the Prime Rate or (b)
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the Federal Funds Rate as determined by the Administrative Agent plus 1/2 of
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1%; each change in the Base Rate shall take effect simultaneously with the
corresponding change or changes in the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate determined with
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reference to the Base Rate as provided in Section 3.1(a) hereof.
"Benefitted Lender" shall have the meaning assigned thereto in Section
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10.5.
"Borrowers" shall have the meaning assigned thereto in the preamble hereof.
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"Borrowing Base" means, at any date of determination , an amount equal to
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the lesser of (a) $70,000,000 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
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most recently ended, less an amount equal to Consolidated Senior Debt at such
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date, plus an amount equal to Debt outstanding under the Revolver Facility at
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such date, and (ii) for any date of 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
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amount equal to Consolidated Senior Debt at such date, plus an amount equal to
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Debt outstanding under the Revolver Facility at such date.
"Borrowing Base Certificate" means the certificate delivered from time to
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time by Maxim, on behalf of the Borrowers, pursuant to Section 6.4.
"Business Day" means (a) for all purposes other than as set forth in clause
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(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in Charlotte, North Carolina are open for the conduct of their commercial
banking business, and (b) with respect to all notices and determinations in
connection with, and payments of principal and interest on, any LIBOR Rate Loan,
any day that is a Business Day described in clause (a) and that is also a day
for trading by and between banks in deposits in the London interbank market.
"Capital Lease" means, with respect to Maxim and its Subsidiaries, any
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lease of any property that would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on a Consolidated balance sheet
of Maxim and its Subsidiaries.
"Cash Collateral Account" shall have the meaning assigned thereto in
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Section 2.5(a).
"Change in Control" means (i) any person or group of persons shall obtain
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beneficial ownership or control (within the meaning of Section 13(d)(3) of the
Exchange Act) in one or more series of transactions of more than thirty percent
(30%) of the common stock of Maxim or more than thirty percent (30%) of the
voting power of shareholders of Maxim entitled to vote in the election of
members of the board of directors of Maxim, (ii) during any period of twenty-
four consecutive months, individuals who at the beginning of such period
constituted the board of directors of Maxim (together with any new directors
whose election by such board of directors or whose nomination for election by
the stockholders of Maxim was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the members of the board of directors
of Maxim, or (iii) there shall have occurred under any indenture or other
instrument evidencing any Debt any "change in control" (as defined in such
indenture or other evidence of Debt) obligating Maxim to repurchase, redeem or
repay all or any part of the Debt or capital stock provided for therein.
"Closing Date" means the date of this Agreement.
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"Code" means the Internal Revenue Code of 1986, and the rules and
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regulations thereunder, each as amended or supplemented from time to time.
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"Collateral" means any assets pledged by any of the Borrowers or any of
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their Subsidiaries to the Administrative Agent for the ratable benefit of itself
and the Lenders in order to secure the Obligations or a portion thereof.
"Collateral Assignment Agreement" means the Collateral Assignment of Notes,
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Loan Documents and Collateral dated as of the date hereof, executed by Kinnaird
& ▇▇▇▇▇▇▇ Interiors, Inc. in favor of the Administrative Agent for the benefit
of itself and the Lenders, as amended, modified or supplemented from time to
time.
"Commitment" means the commitment of a Lender to make Loans, the Issuing
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Bank to issue the Special Purpose Letter of Credit hereunder, and of each Lender
to reimburse Issuing Bank for unreimbursed drawings under the Special Purpose
Letter of Credit in an amount equal to such Lender's Special Purpose L/C
Commitment Percentage of the initial face amount of the Special Purpose Letter
of Credit.
"Commitment Percentage" means, with respect to any Lender and the Issuing
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Bank, the ratio of (a) the amount of the Commitment of such Lender or the
Issuing Bank to (b) the Aggregate Commitments of all Lenders and the Issuing
Bank.
"Consolidated" means, when used with reference to financial statements or
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financial statement items of Maxim and its Subsidiaries, such statements or
items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Contributing Borrower" shall have the meaning assigned thereto in Section
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2.11(d).
"Contingent Obligation" means, with respect to Maxim and its Subsidiaries,
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without duplication, any obligation, contingent or otherwise, of any such Person
pursuant to which such Person has directly or indirectly guaranteed any Debt or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of any
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
condition or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part); provided, that the term Contingent Obligation shall not include (i)
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customary indemnification obligations provided in connection with previously-
consummated acquisition or sale transactions or provided in connection with
future acquisition or sale transactions consummated in compliance with the terms
of this Agreement or (ii) endorsements for collection or deposit in the ordinary
course of business.
"Conventional Letter of Credit" means a Letter of Credit other than the
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Special Purpose Letter of Credit.
"Conventional LOC Obligations" means, as to each Conventional Letter of
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Credit, all liabilities of the Borrowers or any of their Subsidiaries
thereunder, whether contingent or otherwise,
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including (a) the amount available to be drawn or which may become available to
be drawn, (b) all amounts that have been paid or made available by the
Administrative Agent or the Issuing Bank to the extent not reimbursed, and (c)
all unpaid interest, fees and expenses relating thereto.
"Co-Agent" means Fleet in its capacity as co-agent hereunder, and any
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successor thereto appointed pursuant to Section 11.1.
"Credit Facilities" means the collective reference to the Revolver
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Facility, the Term Loan and the Special Purpose Letter of Credit.
"Debt" means, with respect to Maxim and its Subsidiaries, at any date and
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without duplication, the sum, calculated in accordance with GAAP, of (a) all
liabilities, obligations and indebtedness for borrowed money including but not
limited to obligations evidenced by bonds, debentures, notes or other similar
instruments of any such person, (b) all obligations to pay the deferred purchase
price of property or services of any such person, except trade payables arising
in the ordinary course of business not more than ninety (90) days past due or,
if more than ninety (90) days past due, being contested by such person in good
faith, (c) all obligations of any such person as lessee under capital leases,
(d) all debt of any other person secured by a lien on any asset of any such
person, (e) all obligations, contingent or otherwise, of any such person
relative to the face amount of letters of credit, whether or not drawn, and
banker's acceptances issued for the account of any such person, (f) all
contingent obligations of such person, (g) all obligations to redeem,
repurchase, exchange, defease or otherwise make payments in respect of capital
stock or other securities of such person, (h) all Subordinated Debt, (i) the
product of (A) eight (8) multiplied by (B) retail-store rental-related expense
paid or accrued during the period under measurement ending on the date of
determination and (j) all termination payments which would be due and payable by
any such Person pursuant to a Hedging Agreement.
"Debt to EBITDAR Ratio" shall have the meaning assigned thereto in Section
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8.2.
"Default" means any of the events specified in Section 10.1 which with the
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passage of time, the giving of notice or any other condition, would constitute
an Event of Default.
"Documentation Agent" means NationsBank in its capacity as documentation
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agent hereunder, and any successor thereto appointed pursuant to Section 11.1.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
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currency of the United States.
"Draw Notice" shall have the meaning assigned thereto in Section 2.5(f).
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"EBITDAR" means, with respect to Maxim and its Subsidiaries, for any
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period of calculation and without duplication, (i) Net Income for such period,
plus (ii) Interest Expense paid or accrued but not paid during such period, plus
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(iii) income tax expense paid during such period, plus (iv) amortization and
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depreciation expense deducted during such period in calculating Net Income, plus
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(v) retail store rental-related expense paid during such period.
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"Eligible Assignee" means (i) a commercial bank organized under the laws of
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the United States or any state thereof and having total assets in excess of
$1,000,000,000, (ii) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $1,000,000,000, provided
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that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $500,000,000, (v)
any Affiliate of an existing Lender or (vi) any other Person approved by the
Administrative Agent and, if no Default or Event of Default then exists, by
Maxim, which approval shall not be unreasonably withheld.
"Employee Benefit Plan" means any employee benefit plan within the meaning
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of Section 3(3) of ERISA which (a) is maintained for employees or former
employees of any Borrower or any ERISA Affiliate or (b) has at any time within
the preceding six years been maintained for the employees or former employees of
any Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any and all federal, state, provincial and local
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laws, statutes, ordinances, rules, regulations, permits, licenses, approvals and
interpretations, and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and the
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rules and regulations thereunder, each as amended or modified from time to time.
"ERISA Affiliate" means any Person who together with any Borrower is
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treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of
ERISA.
"Event of Default" means any of the events specified in Section 10.1,
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provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Expiration Date" means the third anniversary of the Closing Date.
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"Federal Funds Rate" means, for any day, a fluctuating interest rate per
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annum (rounded upward, if necessary, to the next 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published at 11:00 a.m. (Charlotte time) for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or
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if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"First Union" shall have the meaning assigned thereto in the preamble
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hereof.
"Fiscal Year" means each fiscal year of Maxim and its Subsidiaries ending
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on January 31.
"Funding Borrower" shall have the meaning assigned thereto in Section
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2.11(d).
"GAAP" means generally accepted accounting principles, as recognized by the
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American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, applied and maintained on a consistent basis for Maxim and its
Subsidiaries throughout the period indicated and consistent with the prior
financial practice of Maxim and its Subsidiaries.
"Governmental Approvals" means all authorizations, consents, approvals,
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licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
----------------------
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means any substances or materials (a) which are or
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become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Environmental Law or common law,
(d) the discharge or emission or release of which requires a permit or license
under any Environmental Law or other Governmental Approval, (e) which are deemed
to constitute a nuisance, a trespass or pose a health or safety hazard to
persons or neighboring properties, (f) which are materials consisting of
underground or aboveground storage tanks, whether empty, filled or partially
filled with any substance, or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest rate
-----------------
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate or currency risk exposure executed in
connection with hedging the interest rate or currency exposure of the Borrowers,
and any confirming letter executed pursuant to such hedging agreement, all as
amended or supplemented from time to time.
"Image" means Image Industries, Inc., a corporation organized under the
-----
laws of Delaware and a Wholly-Owned Subsidiary of Maxim.
-7-
"Initial Interest Rate Period" means the period during which all Loans
----------------------------
shall be Base Rate Loans or LIBOR Rate Loans with Interest Periods of one month,
which period shall commence on the date three (3) Business Days after the
Closing Date and end on the earlier of (i) the date on which the Administrative
Agent notifies the Borrowers that the syndication process with respect to the
Loans and the Commitments hereunder has been completed, or (ii) the date sixty
(60) days after the Closing Date.
"Intercompany Subordination Agreement" means the Intercompany Subordination
------------------------------------
Agreement of even date by and among Maxim, certain Subsidiaries of Maxim
identified therein and the Administrative Agent, for the benefit of itself and
the Lenders, substantially in the form of Exhibit H attached hereto, as amended
---------
or supplemented from time to time.
"Interest Expense" means, for Maxim and its Subsidiaries, for any period
----------------
and without duplication, gross interest expense (including without limitation,
interest expense attributable to Capital Leases and all net obligations pursuant
to Hedging Agreements), determined for such period in accordance with GAAP.
"Interest Payment Date" means, with respect to Base Rate Loans, the last
---------------------
Business Day of each calendar quarter commencing with the first calendar quarter
ending after the Closing Date, and with respect to LIBOR Rate Loans, the last
day of each Interest Period applicable thereto (unless such Interest Period
extends over three (3) months, in which case "Interest Payment Date" shall also
include the last Business Day of the third month during such Interest Period).
"Interest Period" shall have the meaning assigned thereto in Section
---------------
3.1(b).
"Issuing Bank" means First Union, as the issuer of a Letter of Credit.
------------
"Joinder Agreement" means a Joinder Agreement substantially in the form of
-----------------
Exhibit I executed by each Subsidiary in accordance with Section 7.12, as
---------
amended or supplemented from time to time.
"Lender" shall have the meaning assigned thereto in the preamble hereof,
------
and includes each Person executing this Agreement as a Lender set forth on the
signature pages hereto and each Person that hereafter becomes a party to this
Agreement as a Lender pursuant to Section 12.9.
"Lending Office" means, with respect to any Lender, the office of such
--------------
Lender maintaining such Lender's applicable Commitment Percentage of the Loans.
"Letter Agreement" shall have the meaning assigned thereto in Section
----------------
4.2(f)(v).
"Letter of Credit" means a letter of credit at any time issued by the
----------------
Issuing Bank for the account of one or more of the Borrowers.
"LIBOR" means the rate of interest determined on the basis of the rate for
-----
deposits in Dollars for a period equal to the applicable Interest Period
commencing on the first day of such Interest
-8-
Period appearing on Telerate Page 3750 as of 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable Interest Period. In the
event that such rate does not appear on Telerate Page 3750, "LIBOR" shall be
determined by the Administrative Agent to be the rate per annum at which
deposits in Dollars are offered by leading reference banks in the London
interbank market to First Union at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable Interest Period for a
period equal to such Interest Period and in an amount substantially equal to the
amount of the applicable Loan.
"LIBOR Rate" means (a) LIBOR divided by (b) one (1) less the Reserve
---------- ---------- ----
Percentage (such rate to be rounded upward to the next whole multiple of 1/16 of
1%).
"LIBOR Rate Loan" means any Loan bearing interest at a rate determined with
---------------
reference to the LIBOR Rate as provided in Section 3.1(a) hereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loan" means any loan or advance made by any Lender pursuant to this
----
Agreement, including without limitation, any Revolver Loan, the Term Loan, and
any Swingline Loan, and all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, the
--------------
Intercompany Subordination Agreement, any Joinder Agreement, the Reimbursement
Agreement, the Security Documents and any supplements thereto executed in
connection with any Joinder Agreement, any Hedging Agreement executed by any
Lender and each other document, instrument and agreement executed and delivered
by any Borrower, a Subsidiary thereof or their counsel in connection with this
Agreement or otherwise referred to herein or contemplated hereby, all as may be
amended or supplemented from time to time.
"LOC Committed Amount" means five million dollars ($5,000,000).
--------------------
"LOC Facing Fee" means the non-refundable, fully-earned fee equal to .10%
--------------
per annum of the face amount of each Letter of Credit, including, without
limitation, the Special Purpose Letter of Credit, payable jointly and severally
by Borrowers to Issuing Bank for its own account quarterly in arrears on the
last Business Day of each calender quarter after the Closing Date based on the
average daily undrawn amount of each Letter of Credit issued.
"LOC Issuance Fee" shall have the meaning assigned thereto in Section
----------------
2.5(e).
"Material Adverse Effect" means, with respect to Maxim or any of its
-----------------------
Subsidiaries, a material adverse effect on the properties, business, prospects,
operations or condition (financial or
-9-
otherwise) of any such Person or the ability of any such Person to perform its
obligations under the Loan Documents to which it is a party.
"Material Contract" means (a) any contract or other agreement, written or
-----------------
oral, of Maxim or any of its Subsidiaries involving monetary liability of or to
any such Person in an amount in excess of $1,000,000 per annum, or (b) any other
contract or agreement, written or oral, of Maxim or any of its Subsidiaries the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect.
"Material Judgment Amount" means $1,000,000.
------------------------
"Maxim" shall have the meaning assigned thereto in the preamble hereof.
-----
"Maximum Borrower Liability" shall have the meaning assigned thereto in
--------------------------
Section 2.11(a).
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate has made, or
accrued an obligation to make, contributions within the preceding six years.
"Net Cash Proceeds" means, as applicable, (a) with respect to any sale or
-----------------
other disposition of assets (including sale/leaseback transactions), the gross
cash proceeds received by Maxim or any of its Subsidiaries from such sale or
other disposition less (i) the sum of (A) all legal, title, recording, transfer
and income tax expenses, commissions and other fees and expenses incurred, and
all other federal, state, local and foreign taxes assessed in connection
therewith and (ii) the principal amount of, premium, if any, and interest on any
Debt secured by a lien on the asset (or a portion thereof) sold or disposed of,
which Debt is required to be repaid in connection with such sale, (b) with
respect to any offering of debt or equity securities, the gross cash proceeds
received by Maxim or any of its Subsidiaries therefrom less all legal,
----
underwriting and other fees, commissions and expenses incurred in connection
therewith and (c) with respect to any payment under an insurance policy, the
amount of cash proceeds received by Maxim or its applicable Subsidiary from the
related insurance company, unless (i) such payment does not exceed $10,000,000
in any single instance, (ii) such payment is applied by Maxim or its applicable
Subsidiary to replace the property to which the payment relates and (iii) such
replacement property is ordered by Maxim or its applicable Subsidiary within
ninety (90) days after receipt of such payment by Maxim or its applicable
Subsidiary.
"Net Income" means, with respect to Maxim and its Subsidiaries, for any
----------
period and without duplication, net income (or loss) for such period determined
in accordance with GAAP; provided, that there shall be excluded from the
--------
calculation of such Net Income the income of any Subsidiary (other than a
wholly-owned Subsidiary) if and to the extent that Maxim or a wholly-owned
Subsidiary has not received the income in a cash distribution.
"Net Worth" means, at any date of determination thereof, the sum of the
---------
capital stock (excluding treasury stock and capital stock subscribed and
unissued) and surplus (including earned surplus, capital surplus and the balance
of the current profit and loss account not transferrable to
-10-
surplus) accounts of Maxim and its Subsidiaries appearing on a consolidated
balance sheet of Maxim and its Subsidiaries prepared in accordance with GAAP.
"New Subsidiaries" means, collectively, Tri-R of Orlando, a corporation
----------------
organized under the laws of Georgia, Creditmax Corp., a corporation organized
under the laws of Georgia, Carpetmax of Palm Beach, Inc., a corporation
organized under the laws of Georgia, Carpetmax of New Mexico, Inc., a
corporation organized under the laws of Georgia, Carpetmax of Charlotte, Inc., a
corporation organized under the laws of Georgia, Cloud Carpets, Inc., a
corporation organized under the laws of Georgia, Carpetmax Alabama Contract,
Inc., a corporation organized under the laws of Georgia, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Carpetmax of Tennessee, Inc., a corporation organized under the laws of
Tennessee, and Maxim Equipment Leasing Company, Inc., a corporation organized
under the laws of Georgia.
"Notes" means the Revolver Note, the Swingline Note, the Term Note and the
-----
Reimbursement Note, and "Note" means any of such Notes.
"Notice of Borrowing" shall have the meaning assigned thereto in Section
-------------------
2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned thereto
---------------------------------
in Section 3.2.
"Notice of Prepayment" shall have the meaning assigned thereto in Section
--------------------
2.4(c).
"Obligations" means, in each case, whether now in existence or hereafter
-----------
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar petition) the Loans, (b) all payment and
other obligations owing by a Borrower to any Lender under any Hedging Agreement
and (c) all other fees and commissions (including attorney's fees), charges,
indebtedness, loans, liabilities, financial accommodations, obligations
(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.
"Officer's Compliance Certificate" shall have the meaning assigned thereto
--------------------------------
in Section 6.2.
"Other Debtor Relief Law" shall have the meaning assigned thereto in
-----------------------
Section 2.11(a).
"Other Taxes" shall have the meaning assigned thereto in Section 3.10(b).
-----------
"Partnership Security Agreements" means (i) the Partnership Interest
-------------------------------
Security Agreement dated as of the date hereof, executed by Maxim in favor of
the Administrative Agent for the benefit of itself and the Lenders, and (ii) the
Partnership Interest Security Agreement dated as of the date hereof, executed
by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Interiors & Associates, Inc. in favor of the Administrative
Agent
-11-
for the benefit of itself and the Lenders, in each case, as amended, modified or
supplemented from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
----
agency.
"Pending Asset Sale" means the pending sale by Maxim to Dalton, Georgia
------------------
Wholesale Floor Covering Inc. of certain assets of three retail store locations
of Kinnaird & ▇▇▇▇▇▇▇ Interiors, Inc. for a purchase price of approximately
$2,100,000.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
------------
Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees or former employees of any
Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees or former employees of any Borrower or
any of their current or former ERISA Affiliates.
"Permitted Liens" means (a) Liens for taxes, assessments and other
---------------
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA or Environmental Laws) not yet due or as to which the
period of grace (not to exceed thirty (30) days), if any, related thereto has
not expired or which are being contested in good faith and by appropriate
proceedings if adequate reserves are maintained to the extent required by GAAP,
(b) the claims of materialmen, mechanics, carriers, warehousemen, processors or
landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business, (i) which are not overdue for a period of more than thirty
(30) days or (ii) which are being contested in good faith and by appropriate
proceedings, (c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation or
obligations under customer service contracts, (d) Liens constituting
encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of real property, which in the aggregate are
not substantial in amount and which do not, in any case, materially detract from
the value of such property or impair the use thereof in the ordinary conduct of
business, (e) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders, (f) existing Liens described on Schedule
--------
9.3, and (g) Liens in favor of lessors of equipment leased to Borrowers,
---
provided that (i) such leased equipment and the proceeds thereof are the only
property encumbered thereby, and (ii) the aggregate amount secured pursuant to
this clause (g) shall not at any time exceed $5,000,000.
"Person" means an individual, corporation, partnership, association, trust,
------
business trust, limited liability company, joint venture, joint stock company,
pool, syndicate, sole proprietorship, unincorporated organization, Governmental
Authority or any other form of entity or group.
"Pledge Agreements" means (i) the Pledge Agreement of even date executed by
-----------------
Maxim in favor of the Administrative Agent for the benefit of itself and the
Lenders substantially in the form of Exhibit F1, (ii) the Pledge Agreement of
----------
even date executed by GCO, Inc. in favor of the Administrative Agent for the
benefit of itself and the Lenders substantially in the form of Exhibit F2, (iii)
----------
the Pledge Agreement of even date executed by Maxim Retail Group, Inc. in favor
of the Administrative Agent for the benefit of itself and the Lenders
substantially in the form of Exhibit
-------
-12-
F3, and (iv) the Pledge Agreement of even date executed by Kinnaird & ▇▇▇▇▇▇▇
--
Interiors, Inc. in favor of the Administrative Agent for the benefit of itself
and the Lenders substantially in the form of Exhibit F4, in each case, as
----------
amended or supplemented from time to time.
"Possible Obligation Liability" means, with respect to any Borrower, the
------------------------------
maximum amount of the outstanding Obligations at the time of determination which
the Administrative Agent determines in its sole discretion that the individual
Borrower would be required to pay upon an Event of Default, taking into
consideration the financial resources of all of the other Borrowers that are
jointly and severally obligated upon the Obligations.
"Prime Rate" means, at any time, the rate of interest per annum publicly
----------
announced from time to time by the Administrative Agent as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on the
day such change in the Prime Rate occurs. The parties hereto acknowledge that
the rate announced publicly by the Administrative Agent as its Prime Rate is an
index or base rate and shall not necessarily be its lowest or best rate charged
to its customers or other banks.
"Projections" shall have the meaning assigned thereto in Section 6.1(c).
-----------
"Register" shall have the meaning assigned thereto in Section 12.9(b).
--------
"Rebate Escrow Account" means the separate, segregated escrow account of
---------------------
Maxim maintained with First Union, into which is deposited funds received by
Maxim reflecting rebate payments reserved for franchisees.
"Reimbursement Agreement" means the Letter of Credit and Reimbursement
-----------------------
Agreement to be dated as of September 1, 1997, among Borrowers, Issuing Bank and
Administrative Agent substantially in the form of Exhibit J attached hereto,
---------
with such changes as the Administrative Agent and the Issuing Bank may in their
sole discretion approve (provided that such changes do not increase the face
amount of the Special Purpose Letter of Credit or extend the term of the Special
Purpose Letter of Credit beyond the Stated Termination Date (as defined in the
Special Purpose Letter of Credit)), as amended or supplemented from time to
time.
"Reimbursement Note" means that certain promissory note in the form
------------------
attached to the Reimbursement Agreement as Exhibit C to be executed and
delivered by each Borrower to the order of the Issuing Bank to evidence its
joint and several obligations under the Reimbursement Agreement.
"Required Lenders" means, at any date, any combination of Lenders holding
----------------
at least 51% of the combined sum of the Aggregate Commitments.
"Request Notice" shall have the meaning assigned thereto in Section 2.5(g).
--------------
"Reserve Percentage" means the maximum daily arithmetic reserve requirement
------------------
imposed by the Board of Governors of the Federal Reserve System (or any
successor) under Regulation D on
-13-
Eurocurrency liabilities (as defined in Regulation D) for the applicable
Interest Period as of the first day of such Interest Period, but subject to any
changes in such reserve requirement becoming effective during the Interest
Period. For purposes of calculating the Reserve Percentage, the reserve
requirement shall be as set forth in Regulation D without benefit of credit for
prorations, exemptions or offsets under Regulation D, and further without regard
to whether or not any Lender elects to actually fund any Loan or portion thereof
with Eurocurrency liabilities. Each calculation by the Administrative Agent of
the LIBOR Rate shall be conclusive and binding for all purposes, absent manifest
error.
"Revolver Facility" means the revolving credit facility extended to the
-----------------
Borrowers pursuant to Section 2.1 in the aggregate principal amount not to
exceed at any time the Borrowing Base.
"Revolver Loan" means any Loan made to the Borrowers pursuant to Section
-------------
2.1, and all such Loans collectively as the context requires.
"Revolver Notes" means the separate Revolving Credit Notes made by the
--------------
Borrowers payable to the order of each Lender, substantially in the form of
Exhibit A-1 hereto, evidencing the Revolver Facility, and any amendments and
-----------
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "Revolver
Note" means any of such Notes.
"Revolver Facility Termination Date" means the earliest of the dates
----------------------------------
referred to in Section 2.8.
"Revolver Loan Commitment" means, as to any Lender, the obligation of such
------------------------
Lender to make Revolver Loans to the Borrowers hereunder in an aggregate
principal amount at any time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1, as the same may be reduced or
------------
modified at any time or from time to time pursuant to Section 12.9.
"Revolver Loan Commitment Percentage" means, as to any Lender at any time,
-----------------------------------
the ratio of (a) the amount of the Revolver Loan Commitment of such Lender to
(b) the aggregate Revolver Loan Commitments of all of the Lenders.
"Scheduled Term Installments" means the payments of the aggregate
----------------------------
principal balance of the Term Loan which the Borrowers are obligated to pay
pursuant to Section 2.6, which are to be made in eight (8) quarterly payments,
seven (7) of such quarterly payments, each in the amount of $3,750,000, to be
payable on the last day of each calendar quarter, commencing December 31, 2000,
and one (1) final such quarterly payment to be payable on December 31, 2002, in
the amount of $3,750,000 or, if different, the aggregate principal amount of the
Term Loan then outstanding.
"SEC" means the Securities and Exchange Commission.
---
"Security Agreement" means the Security Agreement of even date
------------------
substantially in the form of Exhibit G executed by the Borrowers in favor of the
---------
Administrative Agent for the benefit of itself and the Lenders, as amended,
modified or supplemented from time to time.
-14-
"Security Documents" means the collective reference to the Security
------------------
Agreement, the Pledge Agreement, the Trademark Assignment, the Partnership
Security Agreements, the Collateral Assignment Agreement, the Aircraft Chattel
Mortgage and each other agreement or writing pursuant to which Maxim or any
Subsidiary thereof pledges or grants a security interest in the Collateral or
such Person guaranties the payment or performance of the Obligations.
"Senior Debt" means, at any date of determination thereof, the Total Debt,
-----------
less all Subordinated Debt, of Maxim and its Subsidiaries.
"Solvent" means, with respect to each of Maxim and each of its
-------
Subsidiaries, that such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is able to pay its debts as they mature, (b) owns property having
a value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Special Purpose Letter of Credit" means the letter of credit of up to
--------------------------------
Thirty-One Million Dollars ($31,000,000) to be issued by the Issuing Bank
pursuant to the terms of the Reimbursement Agreement.
"SPLC Commitment" means, as to any Lender, the obligation of such Lender to
---------------
purchase without recourse a participation from Issuing Bank in the Special
Purpose Letter of Credit as provided in Section 2.5(d) in an aggregate amount at
any time not to exceed the amount set forth opposite such Lender's name on
Schedule 1.1, as the same may be reduced or modified at any time or from time to
------------
time pursuant to Section 12.9.
"SPLC Commitment Percentage" means, as to any Lender at any time, the ratio
--------------------------
of (a) the amount of the SPLC Commitment of such Lender to (b) the aggregate
SPLC Commitment of all of the Lenders.
"SPLC Obligations" means all liabilities of the Borrowers or any of their
----------------
Subsidiaries under the Reimbursement Agreement or with respect to the Special
Purpose Letter of Credit, whether contingent or otherwise, including (a) the
obligation to reimburse Issuing Bank for, or to deliver to the Administrative
Agent, the amount available to be drawn or which may become available to be
drawn under the Special Purpose Letter of Credit, (b) the obligation to
reimburse the Administrative Agent or the Issuing Bank, as applicable, for all
amounts that have been paid or made available by the Administrative Agent or the
Issuing Bank with respect to the Special Purpose Letter of Credit to the extent
not reimbursed, and (c) all unpaid interest, fees and expenses relating thereto.
"Subordinated Debt" means, at any date of determination thereof, any Debt
-----------------
of Maxim and its Subsidiaries that is subordinated to the Credit Facilities upon
terms and conditions satisfactory to the Lenders.
"Subsidiary" means as to any Person, any corporation, partnership or other
----------
entity of which more than fifty percent (50%) of the outstanding capital stock
or other ownership interests having
-15-
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity is at the time,
directly or indirectly, owned by such Person or the management is otherwise
controlled by such Person (irrespective of whether, at the time, capital stock
or other ownership interests of any other class or classes of such corporation,
partnership or other entity shall have or might have voting power by reason of
the happening of any contingency). Unless otherwise qualified, references to
"Subsidiary" or "Subsidiaries" herein shall refer to those of Maxim.
"Swingline Committed Amount" means $5,000,000.
--------------------------
"Swingline Lender" means First Union, as the Lender with respect to
----------------
Swingline Loans.
"Swingline Loans" shall have the meaning assigned thereto in Section 2.3.
---------------
"Swingline Note" shall have the meaning assigned thereto in Section 2.3.
--------------
"Swingline Notice of Borrowing" shall have the meaning assigned thereto in
-----------------------------
Section 2.3(b).
"Taxes" shall have the meaning assigned thereto in Section 3.10(a).
-----
"Term Loan" means the Loan in the aggregate principal of TWENTY-NINE
---------
MILLION DOLLARS ($29,000,000), which is to be made by the Lenders to the
Borrowers pursuant to Section 2.6(a).
"Term Loan Commitment" means, as to any Lender, the amount set forth
--------------------
opposite such Lender's name under the caption "Term Loan Commitment" on Schedule
--------
1.1, as the same may be reduced or modified at any time or from time to time
---
pursuant to Section 12.9.
"Term Loan Commitment Percentage" means, as to any Lender at any time, the
-------------------------------
ratio of (a) the amount of the Term Loan Commitment of such Lender to (b) the
aggregate Term Loan Commitments of all of the Lenders.
"Term Notes" means the separate Term Loan Notes made by the Borrowers
----------
payable to the order of each Lender, substantially in the form of Exhibit A-2
-----------
hereto, evidencing the Term Loan, and any amendments and modifications thereto,
any substitutes therefor, and any replacements, restatements, renewals or
extension thereof, in whole or in part; "Term Note" means any of such Notes.
"Term Sheet" shall have the meaning assigned thereto in Section 3.3(b).
----------
"Termination Event" means: (a) a "Reportable Event" described in Section
-----------------
4043 of ERISA (other than a Reportable Event as to which the provision of 30
days' notice has been waived by the PBGC under applicable regulations); (b) the
withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (c) the termination of a Pension Plan, the filing of a
notice of intent
-16-
to terminate a Pension Plan or the treatment of a Pension Plan amendment as a
distress termination under Section 4041(c) of ERISA; (d) the institution of
proceedings to terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC; (e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (f) the partial or
complete withdrawal of any Borrower or any ERISA Affiliate from a Multiemployer
Plan; (g) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA; (h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA; or (i) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Debt" means, at any date of determination thereof, the Consolidated
----------
Debt (including Subordinated Debt) of Maxim and its Subsidiaries.
"Trademark Assignment" means, collectively, the Assignments for Security of
--------------------
even date herewith executed by Image, GCO, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Interiors &
Associates, Inc., Carpetmax L.P. and Bay Area Carpets, Inc., respectively, in
favor of the Administrative Agent, for the ratable benefit of the Lenders, in
substantially the form attached hereto as Exhibit K.
---------
"UCC" means the Uniform Commercial Code as in effect in the State of
---
Georgia.
"United States" means the United States of America.
-------------
"Unreimbursed Draw Notice" shall have the meaning assigned thereto in
------------------------
Section 2.5(f).
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary all of the
------------
shares of capital stock or other ownership interests of which are, directly or
indirectly, owned or controlled by Maxim and/or one or more of its Wholly-Owned
Subsidiaries.
SECTION 1.2 General. All terms of an accounting nature not specifically
-------
defined herein shall have the meanings assigned thereto by GAAP. Unless
otherwise specified, a reference in this Agreement to a particular section,
subsection, Schedule or Exhibit is a reference to that section, subsection,
Schedule or Exhibit of this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the
singular and plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter. Any reference
herein to "Charlotte time" shall refer to the applicable time of day in
Charlotte, North Carolina.
SECTION 1.3 Accounting Matters. All financial and accounting
------------------
calculations, measurements and computations made for any purpose relating to
this Agreement, including without limitation, all computations utilized by the
Borrowers or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent to the
contrary agreed to by the Borrowers, be performed in accordance with GAAP. In
the event that changes in
-17-
GAAP (as in effect on the Closing Date) shall be mandated by the Financial
Accounting Standards Board or any similar accounting body of comparable standing
or shall be recommended by the Borrowers' certified public accountants, to the
extent that such changes would modify such accounting terms or the
interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrowers, the
Lenders and the Administrative Agent shall have entered into an amendment of
this Agreement to the extent necessary to reflect any such changes in the
financial covenants and other terms and conditions of this Agreement.
SECTION 1.4 Other Definitions and Provisions.
--------------------------------
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
------------------------
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof," "herein" and "hereunder" and words
-------------
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
ARTICLE II
CREDIT FACILITY
---------------
SECTION 2.1 Revolver Loans. Subject to the terms and conditions of this
--------------
Agreement, each Lender severally but not jointly agrees to make Revolver Loans
to the Borrowers jointly and severally from time to time from the Closing Date
through the Revolver Facility Termination Date as requested by Maxim, on behalf
of Borrowers, in accordance with the terms of Section 2.2; provided that (i) the
--------
aggregate principal amount of all outstanding Revolver Loans (after giving
effect to any amount requested) shall not exceed the lesser of (A) the Borrowing
Base less (x) the aggregate principal amount of Swingline Loans outstanding and
less (y) the aggregate Conventional LOC Obligations, or (B) seventy million
dollars ($70,000,000) less (x) the aggregate principal amount of Swingline
Loans outstanding and less (y) the aggregate Conventional LOC Obligations, 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.
-18-
SECTION 2.2 Procedure for Advances of Revolver Loans.
----------------------------------------
(a) Requests for Borrowing. Maxim, on behalf of the Borrowers, shall give
----------------------
the Administrative Agent irrevocable prior written notice in the form attached
hereto as Exhibit B1 (a "Notice of Borrowing") not later than 11:00 a.m.
----------
(Charlotte time) (i) at least one (1) Business Day before each Base Rate Loan
and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of its
intention to borrow, specifying (A) the date of such borrowing, which shall be a
Business Day, (B) the amount of such borrowing, which shall, with respect to
LIBOR Rate Loans, be in an aggregate principal amount of $3,000,000 or a whole
multiple of $1,000,000 in excess thereof and, with respect to Base Rate Loans,
be in an aggregate principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof, (C) whether the Loans are to be LIBOR Rate Loans or
Base Rate Loans and (D) if the borrowing is to occur after the Initial Interest
Rate Period, in the case of a LIBOR Rate Loan, the duration of the Interest
Period applicable thereto. Notices received after 11:00 a.m. (Charlotte time)
shall be deemed received on the next Business Day. The Administrative Agent
shall promptly notify the Lenders of each Notice of Borrowing on the date that
the Administrative Agent receives or is deemed to receive such Notice of
Borrowing pursuant to the immediately preceding sentence.
(b) Disbursement of Revolver Loans. Not later than 1:00 p.m. (Charlotte
------------------------------
time) on the proposed borrowing date for any Revolver Loan, each Lender will
make available to the Administrative Agent, for the account of the Borrowers, at
the office of the Administrative Agent in Dollars in funds immediately available
to the Administrative Agent, such Lender's Revolver Loan Commitment Percentage
of the Revolver Loans requested. The proceeds of each borrowing requested
pursuant to this Section 2.2(b) shall be disbursed in immediately available
funds by crediting such proceeds to the account of Borrowers designated in the
Accounts Designation Letter. Subject to Section 3.6 hereof, the Administrative
Agent shall not be obligated to disburse the proceeds of any Revolver Loan
requested pursuant to this Section 2.2 until each Lender shall have made
available to the Administrative Agent its applicable Revolver Loan Commitment
Percentage of such Revolver Loan.
SECTION 2.3 Swingline Loan Subfacility.
--------------------------
(a) Swingline Commitment. Subject to the terms and conditions of this
--------------------
Agreement, First Union, in its individual capacity, agrees to make certain
revolving credit loans requested by the Borrowers in Dollars to the Borrowers
(each a "Swingline Loan" and, collectively, the "Swingline Loans") from time to
time from the Closing Date until the Revolver Facility Termination Date for the
purposes hereinafter set forth; provided, however, that at any time (i) the
-------- -------
aggregate principal amount of Swingline Loans outstanding shall not exceed the
Swingline Committed Amount, and (ii) the aggregate principal amount of
outstanding Revolver Loans plus the aggregate principal amount of outstanding
----
Swingline Loans shall not exceed the lesser of (A) the aggregate Revolver Loan
Commitments less the aggregate Conventional LOC Obligations or (B) the
Borrowing Base less the aggregate Conventional LOC Obligations. Swingline Loans
hereunder shall be made as Base Rate Loans and may be repaid and reborrowed in
accordance with the provisions hereof.
-19-
(b) Swingline Loan Advances.
-----------------------
(i) Notices; Disbursement. Whenever the Borrowers desire a Swingline
---------------------
Loan advance hereunder Maxim, on behalf of the Borrowers, shall give written
notice in the form attached hereto as Exhibit B2 (a "Swingline Notice of
----------
Borrowing") (or telephone notice promptly confirmed in writing) to the Swingline
Lender not later than 12:00 Noon (Charlotte time) on the Business Day of the
requested Swingline Loan advance. Each such Swingline Notice of Borrowing shall
be irrevocable and shall specify (A) that a Swingline Loan advance is requested,
(B) the date of the requested Swingline Loan advance (which shall be a Business
Day) and (C) the principal amount of the Swingline Loan advance requested. Each
Swingline Loan shall be made as a Base Rate Loan and shall mature as provided
in subsection (b)(iii) below.
(ii) Minimum Amounts. Each Swingline Loan advance shall be in a
---------------
minimum principal amount of $500,000 and in integral multiples of $100,000 in
excess thereof (or the remaining amount of the Swingline Committed Amount, if
less).
(iii) Repayment of Swingline Loans. The principal amount of all
----------------------------
Swingline Loans shall be due and payable on the earlier of (A) the maturity date
specified by the Swingline Lender or (B) the Revolver Facility Termination Date.
The Swingline Lender may, at any time, in its sole discretion, by written notice
to the Borrowers and the Lenders, demand repayment of its Swingline Loans by way
of an advance under the Revolver Facility, in which case the Borrowers shall be
deemed to have requested a Revolver Loan comprised solely of Base Rate Loans in
the amount of such Swingline Loans; provided, however, that any such demand
-------- -------
shall be deemed to have been given one Business Day prior to the Revolver
Facility Termination Date and on the date of the occurrence of any Event of
Default described in Section 10.1 and upon acceleration of the Obligations
hereunder and the exercise of remedies in accordance with the provisions of
Section 10.2. Each Lender hereby irrevocably agrees to make its pro rata share
of each such Revolver Loan in the amount, in the manner and on the date
specified in the preceding sentence notwithstanding (I) the amount of such
---------------
borrowing may not comply with the minimum amount for advances of Revolver Loans
otherwise required hereunder, (II) whether any conditions specified in Section
4.3 are then satisfied, (III) whether a Default or an Event of Default then
exists, (IV) failure of any such request or deemed request for Revolver Loan to
be made by the time otherwise required hereunder, (V) whether the date of such
borrowing is a date on which Revolver Loans are otherwise permitted to be made
hereunder or (VI) any termination of the Revolver Facility relating thereto
immediately prior to or contemporaneously with such borrowing. In the event
that any Revolver Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the commencement
of a proceeding under the Bankruptcy Code with respect to any Borrower or any
Subsidiary of any Borrower), then each Lender hereby agrees that it shall
forthwith purchase (as of the date such borrowing would otherwise have occurred,
but adjusted for any payments received from such Borrower on or after such date
and prior to such purchase) from the Swingline Lender such participations in the
outstanding Swingline Loans as shall be necessary to cause each such Lender to
share in such Swingline Loans ratably based upon its Revolver Loan Commitment
Percentage of the aggregate Revolver Loan Commitments (determined before giving
effect to any termination of the Revolver Facility pursuant to Section 2.8),
provided that (A) all interest payable on the Swingline Loans shall be for the
--------
account of the Swingline Lender until the
-20-
date as of which the respective participation is purchased and (B) at the time
any purchase of participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Swingline Lender, to the
extent not paid to the Swingline Lender by the Borrowers in accordance with the
terms of subsection (c)(ii) hereof, interest on the principal amount of
participation purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to but excluding the date of payment for
such participation, at the rate equal to the Federal Funds Rate.
(c) Interest on Swingline Loans.
---------------------------
(i) Subject to the provisions of Section 3.1, each Swingline Loan
shall bear interest at a per annum rate (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be) equal
to the Base Rate plus the Applicable Margin.
----
(ii) Payment of Interest. Interest on Swingline Loans shall be
-------------------
payable in arrears on each applicable Interest Payment Date (or at such other
times as may be specified herein).
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
--------------
executed promissory note (the "Swingline Note") of the Borrowers to the
Swingline Lender in substantially the form of Exhibit A-3.
-----------
SECTION 2.4 Repayment of Revolver Loans.
---------------------------
(a) Repayment on Revolver Facility Termination Date. The Borrowers shall
-----------------------------------------------
repay the outstanding principal amount of all Revolver Loans made to such
Borrowers in full, together with all accrued but unpaid interest thereon, on the
Revolver Facility Termination Date.
(b) Mandatory Repayment of Excess Loans. If at any time the outstanding
-----------------------------------
principal amount of all Revolver Loans exceeds the aggregate Revolver Loan
Commitments of the Lenders or the Borrowing Base, the Borrowers shall repay such
excess. Each such repayment shall be accompanied by accrued interest on the
amount repaid and any amount required to be paid pursuant to Section 3.8 hereof.
(c) Optional Repayments. The Borrowers may at any time and from time to
-------------------
time repay the Revolver Loans made thereto, in whole or in part, upon at least
three (3) Business Days' irrevocable notice to the Administrative Agent with
respect to LIBOR Rate Loans and one (1) Business Day irrevocable notice with
respect to Base Rate Loans, in the form attached hereto as Exhibit M ("Notice of
Prepayment"), specifying the date and amount of repayment and whether the
repayment is of LIBOR Rate Loans or Base Rate Loans or a combination thereof,
and, if of a combination thereof, the amount allocable to each. Upon receipt of
such Notice of Prepayment, the Administrative Agent shall promptly notify each
Lender. If any such Notice of Prepayment is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $3,000,000 or a whole multiple of
$1,000,000 in excess thereof with respect to LIBOR Rate Loans and $1,000,000 or
a whole multiple of $500,000
-21-
in excess thereof with respect to Base Rate Loans. Each such repayment shall be
accompanied by any amount required to be paid pursuant to Section 3.8.
(d) Limitation on Repayment of LIBOR Rate Loans. No Borrower may repay any
-------------------------------------------
LIBOR Rate Loan hereunder on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 3.8.
SECTION 2.5 Letters of Credit.
-----------------
(a) Issuance of Conventional Letters of Credit. Issuing Bank may from
------------------------------------------
time to time, upon three (3) days prior irrevocable notice to the Administrative
Agent, issue, extend or renew Conventional Letters of Credit for the account of
one or more of the Borrowers, upon such terms and conditions as Issuing Bank may
then require; provided that (i) the aggregate Conventional LOC Obligations shall
--------
at no time exceed the LOC Committed Amount, and (ii) the sum of (A) the
aggregate principal amount of Revolver Loans outstanding, plus (B) the aggregate
----
principal amount of Swingline Loans outstanding, plus (C) the aggregate
----
Conventional LOC Obligations, shall at no time exceed the lesser of (I)
$70,000,000, and (II) the Borrowing Base. No Conventional Letter of Credit
shall have (x) an original expiry date more than one year from the date of
issuance or (y) as originally issued or as extended, an expiry date extending
beyond the Revolver Facility Termination Date. The joint and several
reimbursement obligations of Borrowers under any Conventional Letters of Credit
are to be Obligations hereunder, and the coming due of any reimbursement
obligation under any Conventional Letter of Credit shall be deemed to be a
request for a Revolver Loan in the amount of such Obligation. Borrowers jointly
and severally are to pay to Issuing Bank for its own account the LOC Facing Fee,
if any, payable quarterly in arrears on the last Business Day of each calender
quarter after the Closing Date based on the average daily undrawn amount of each
Letter of Credit issued on or after the Closing Date. If an Event of Default
occurs or exists, Borrowers, on demand, are to deliver to the Administrative
Agent good funds equal to 100% of the maximum liability under all outstanding
Conventional Letters of Credit, which funds are to be deposited in a separate,
blocked account (the "Cash Collateral Account") maintained by Borrowers with the
Administrative Agent and are to be held in the Cash Collateral Account for the
benefit of the Lenders as cash collateral for the Borrowers' joint and several
reimbursement obligations and the other Obligations.
(b) Issuance of Special Purpose Letter of Credit. The Issuing Bank shall
---------------------------------------------
issue the Special Purpose Letter of Credit for the account of Maxim and/or Image
up to the original face amount of thirty-one million dollars ($31,000,000), with
such terms and in such format as provided in the Reimbursement Agreement. The
joint and several reimbursement obligations of Borrowers under the Special
Purpose Letter of Credit are to be Obligations hereunder, and except as
otherwise provided in the Reimbursement Agreement, the coming due of any
reimbursement obligation under any Special Purpose Letter of Credit shall be
deemed to be a request for a Revolver Loan in the amount of such obligation. If
an Event of Default occurs or exists, Borrowers, on demand, are to deliver to
the Administrative Agent good funds equal to 100% of the maximum liability under
the Special Purpose Letter of Credit, which funds are to be deposited in the
Cash Collateral Account maintained by Borrowers with the Administrative Agent
and are to be held in the Cash Collateral
-22-
Account for the benefit of the Lenders as cash collateral for the Borrowers'
joint and several reimbursement obligations as set forth in the Reimbursement
Agreement and the other Obligations.
(c) Participation in Conventional Letters of Credit. Each Lender shall be
-----------------------------------------------
deemed to have purchased without recourse a participation from Issuing Bank in
each Conventional Letter of Credit issued, renewed or extended pursuant to
Section 2.5(a) and the obligations arising under such Conventional Letter of
Credit, in each case in an amount equal to its Revolver Loan Commitment
Percentage of the obligations under such Conventional Letter of Credit, and
shall absolutely, unconditionally and irrevocably be obligated to pay to Issuing
Bank its Revolver Loan Commitment Percentage of any unreimbursed drawing under
such Conventional Letter of Credit. Without limiting the scope and nature of
each Lender's participation in any Conventional Letter of Credit, to the extent
that Issuing Bank has not been reimbursed with respect to any Conventional
Letter of Credit, as required hereunder or under any such Conventional Letter of
Credit, each such Lender shall pay to Issuing Bank its Revolver Loan Commitment
Percentage of such unreimbursed drawing in same day funds pursuant to the
provisions of subsection (f) hereof. The obligation of each Lender to reimburse
Issuing Bank as provided above shall be absolute and unconditional and shall not
be affected by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the joint and several obligations of the Borrowers to reimburse Issuing
Bank under any Conventional Letter of Credit, together with interest on such
reimbursement amounts as provided in subsection (f) hereof.
(d) Participation in Special Purpose Letter of Credit. Each Lender shall be
-------------------------------------------------
deemed to have purchased without recourse a participation from Issuing Bank in
the Special Purpose Letter of Credit and the SPLC Obligations, in each case in
an amount equal to its SPLC Commitment Percentage of the obligations under such
Special Purpose Letter of Credit, and shall absolutely, unconditionally and
irrevocably be obligated to pay to Issuing Bank its SPLC Commitment Percentage
of any unreimbursed drawing under such Special Purpose Letter of Credit.
Without limiting the scope and nature of each Lender's participation in the
Special Purpose Letter of Credit, to the extent that Issuing Bank has not been
reimbursed as required under the Reimbursement Agreement, each such Lender shall
pay to Issuing Bank its Special Purpose Commitment Percentage of such
unreimbursed drawing in same day funds pursuant to the provisions of subsection
(f) hereof. The obligation of each Lender to reimburse Issuing Bank as provided
above shall be absolute and unconditional and shall not be affected by the
occurrence of a Default, an Event of Default or any other occurrence or event.
Any such reimbursement shall not relieve or otherwise impair the obligations of
Borrowers to reimburse Issuing Bank under the Special Purpose Letter of Credit,
as provided in the Reimbursement Agreement.
(e) LOC Issuance Fee. Each Lender, upon the issuance of a Letter of
----------------
Credit, shall share in the fee (the "LOC Issuance Fee") that is payable to the
Issuing Bank with respect to the undrawn amount of the Letter of Credit and such
fee shall be paid by Borrowers on the last day of each calender quarter in
arrears, commencing September 30, 1997, based upon the average daily undrawn
amount of such Letter of Credit multiplied by the LIBOR Applicable Margin in
effect on the last day of such quarter (irrespective of whether any LIBOR Loans
are then outstanding.
-23-
(f) Reimbursement. Issuing Bank will promptly give notice ("Draw Notice")
-------------
to the Borrowers of any drawing under any Conventional Letter of Credit. Unless
Maxim, on behalf of the Borrowers, shall (i) with respect to Conventional
Letters of Credit, cause the Issuing Bank to be reimbursed for such drawing
other than from proceeds of Revolver Loans by not later than 11:00 a.m.
(Charlotte time) on the day next succeeding the date of any Draw Notice, and
(ii) with respect to the Special Purpose Letter of Credit, cause the Issuing
Bank to be reimbursed for any drawing under the Special Purpose Letter of Credit
on the date of such drawing pursuant to the Reimbursement Agreement, the
Borrowers shall be deemed to have requested that the Lenders make Revolver Loans
in the amount of such drawing as provided in subsection (g) hereof on the
related Letter of Credit, the proceeds of which will be used to satisfy the
related reimbursement obligations to Issuing Bank. The Borrowers jointly and
severally agree (i) to reimburse Issuing Bank on the date of drawing under any
Conventional Letter of Credit (either with the proceeds of Revolver Loans or
otherwise) in immediately available funds, and (ii) with respect to any drawing
under the Special Purpose Letter of Credit, to reimburse Issuing Bank in
accordance with the terms of the Reimbursement Agreement. If the Borrowers
shall fail to reimburse Issuing Bank as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a rate per annum equal to the Base
Rate plus the sum of (i) the Applicable Margin in effect from time to time and
----
(ii) two percent (2%). The Borrowers' reimbursement obligations hereunder shall
be absolute and unconditional under all circumstances irrespective of any rights
of setoff, counterclaim or defense to payment any Borrower may claim or have
against Issuing Bank, the Administrative Agent, the Lenders, the beneficiary of
such Letter of Credit or any other Person, including without limitation any
defense based on any failure of any Borrower or any Subsidiary of any Borrower
to receive consideration or the legality, validity or unenforceability of the
Letter of Credit. Issuing Bank will promptly give notice ("Unreimbursed Draw
Notice") to the other Lenders of the amount of any unreimbursed drawing under
this subsection (f) or, in the case of the Special Purpose Letter of Credit,
under the Reimbursement Agreement, and each Lender shall promptly pay to the
Administrative Agent for the account of Issuing Bank, in Dollars and in
immediately available funds, (x) in the case of Conventional Letters of Credit,
the amount of such Lender's Revolver Loan Commitment Percentage of such
unreimbursed drawing under such Conventional Letter of Credit, and (y) in the
case of the Special Purpose Letter of Credit, the amount of such Lender's SPLC
Commitment Percentage of such unreimbursed drawing under the Special Purpose
Letter of Credit. Such payment shall be made on the day such Unreimbursed Draw
Notice is received by such Lender from Issuing Bank if such Unreimbursed Draw
Notice is received at or before 3:00 P.M. (Charlotte time) on a Business Day;
otherwise, such payment shall be made at or before 1:00 P.M. (Charlotte time)
on the Business Day next succeeding the day such Unreimbursed Draw Notice is
received. If such Lender does not pay such amount to Issuing Bank in full upon
such request, such Lender shall, on demand, pay to the Administrative Agent for
the account of Issuing Bank interest on the unpaid amount during the period from
the date such Unreimbursed Draw Notice is given until such Lender pays such
amount to Issuing Bank in full at a rate per annum equal to, if paid within two
(2) Business Days of the date that such Lender is required to make payments of
such amount pursuant to the preceding sentence, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each Lender's obligation to make
such payment to Issuing Bank, and the right of Issuing Bank to receive the same,
shall be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the obligations of Borrowers
-24-
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment by a
Lender to Issuing Bank, such Lender shall, automatically and without any further
action on the part of Issuing Bank or such Lender, acquire a participation in an
amount equal to such payment (excluding the portion of such payment constituting
interest owing to Issuing Bank) in the related unreimbursed drawing portion of
the Conventional Letter of Credit or the Special Purpose Letter of Credit, as
the case may be, and in the interest thereon, and shall have a claim against
Borrowers with respect thereto. If the Lenders have acquired a participation in
an unreimbursed drawing under the Special Purpose Letter of Credit, pursuant to
a payment made by such Lenders in the manner provided for above, Issuing Bank
shall not consent to a reinstatement of the Interest Component (as defined in
the Special Purpose Letter of Credit) of the Special Purpose Letter of Credit
unless all of the Lenders which have acquired such participation interest shall
consent in writing to such reinstatement.
(g) Repayment with Revolver Loans. On any day on which the Borrowers shall
-----------------------------
have requested, or been deemed to have requested as provided in (f) above, a
Revolver Loan advance to reimburse a drawing under a Letter of Credit, the
Administrative Agent shall promptly (and in any event by not later than 2:00
p.m. (Charlotte time)) give notice ("Request Notice") to the Lenders that a
Revolver Loan has been requested or deemed requested by the Borrowers to be made
in connection with a drawing under a Letter of Credit, in which case Lenders
shall make Revolver Loans to the Borrowers jointly and severally in a principal
amount for each Lender equal to such Lender's Revolver Loan Commitment
Percentage of such Revolver Loan requested or deemed to be requested by the
Borrowers as provided below in this subsection (g). Each Lender shall make
available to the Administrative Agent, at the office of the Administrative Agent
in Dollars in funds immediately available to the Administrative Agent, such
Lender's Revolver Loan Commitment Percentage of the Revolver Loans requested,
and the proceeds thereof shall be paid directly to Issuing Bank for application
to (x) in the case of any Conventional Letter of Credit, the respective
Conventional LOC Obligations, and (y) in the case of the Special Purpose Letter
of Credit, the SPLC Obligations. Each such Lender hereby irrevocably agrees to
make its Revolver Loan Commitment Percentage of each such Revolver Loan
immediately upon any such request or deemed request in the amount and in the
manner specified in the preceding sentence on the date that any 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 Request Notice is given,
but adjusted for any payments received from the Borrowers on or after such date
and prior to such purchase) from Issuing Bank such participation in (x) in the
case of any Conventional Letter of Credit, the outstanding Conventional LOC
Obligations, and (y) in the case of the Special Purpose Letter of Credit, the
outstanding SPLC Obligations, as shall be necessary to
-25-
cause each such Lender to share in such (A) Conventional LOC Obligations,
ratably (based upon the respective Revolver Loan Commitment Percentages of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 2.8)) in the case of any Conventional Letter of Credit, and
(B) SPLC Obligations, ratably based on the SPLC Commitment Percentage in the
case of the Special Purpose Letter of Credit, provided, further, that at the
-----------------
time any such purchase of a participation is actually made, the purchasing
Lender shall be required to pay to Issuing Bank, to the extent not paid to the
Issuing Bank by the Borrowers in accordance with the terms of subsection (f)
hereof, interest on the principal amount of participation purchased for each day
from and including the day upon which such 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.
(h) Renewal, Extension. The renewal or extension of any Letter of Credit
------------------
shall, for purposes hereof, be treated in all respects the same as the issuance
of a new Letter of Credit hereunder.
(i) Uniform Customs and Practices. Issuing Bank may have the Letters of
-----------------------------
Credit be subject to the Uniform Customs and Practices for Documentary Credits,
as published as of the date of issue by the International Chamber of Commerce
(the "UCP"), in which case the UCP may be incorporated therein and deemed in all
---
respects to be a part thereof.
(j) Indemnification; Nature of Issuing Bank's Duties.
------------------------------------------------
(i) In addition to its other obligations under this Section, the
Borrowers jointly and severally shall and do hereby protect, indemnify, pay
and save Issuing Bank harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that Issuing Bank may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance of any
Letter of Credit or (B) the failure of Issuing Bank to honor a drawing
under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions, herein
called "Government Acts").
(ii) As between the Borrowers and Issuing Bank, the Borrowers shall
assume all risks of the acts, omission or misuse of any Letter of Credit
by the beneficiary thereof, and Issuing Bank shall not be responsible (A)
for the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the application
for and issuance of any Letter of Credit, even if any such document should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged, (B) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason, (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher, (D) for
any loss or delay in the transmission or otherwise of any document required
in order to make a
-26-
drawing under a Letter of Credit or of the proceeds thereof, and (E) for
any consequences arising from causes beyond the control of Issuing Bank,
including, without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of Issuing Bank's rights or powers
hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions of the foregoing, any action taken or omitted by
Issuing Bank, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Bank under any resulting liability to the Borrowers or any of their
Subsidiaries. It is the intention of the parties that this Agreement shall
be construed and applied to protect and indemnify Issuing Bank against any
and all risks involved in the issuance of the Letters of Credit, all of
which risks are hereby assumed by the Borrowers (on behalf of themselves
and each of their Subsidiaries), including, without limitation, any and all
Government Acts. Issuing Bank shall not, in any way, be liable for any
failure by Issuing Bank or anyone else to pay any drawing under any Letter
of Credit as a result of any Government Acts or any other cause beyond the
control of Issuing Bank.
(iv) Nothing in this subsection (g) is intended to limit (i) the
joint and several reimbursement obligations of the Borrowers contained in
subsection (c) above, or (ii) the reimbursement obligations of Borrowers
contained in the Reimbursement Agreement. The joint and several obligations
of the Borrowers under this subsection (g) shall survive the termination of
this Agreement. No act or omissions of any current or prior beneficiary of
a Letter of Credit shall in any way affect or impair the rights of Issuing
Bank to enforce any right, power or benefit under this Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (g), the Borrowers shall not have an obligation to indemnify
Issuing Bank in respect of any liability incurred by Issuing Bank (A)
arising solely out of the negligence or willful misconduct of Issuing Bank,
as determined by a court of competent jurisdiction, or (B) caused by
Issuing Bank's failure to pay under any Letter of Credit after presentation
to it of a request strictly complying with the terms and conditions of such
Letter of Credit, as determined by a court of competent jurisdiction,
unless such payment is prohibited by at law, regulation, court order or
decree.
(k) Responsibility of Issuing Bank. It is expressly understood and agreed
------------------------------
that the obligations of Issuing Bank to the Lenders are only those expressly set
forth in this Agreement and that Issuing Bank shall be entitled to assume with
respect to any Revolver Loans requested or deemed to be requested hereunder that
the conditions precedent to borrowings set forth in Section 4.3 have been
satisfied; provided, however, that nothing set forth in this Section 2.5 shall
-------- -------
be deemed to prejudice the right of any Lender to recover from Issuing Bank any
amounts made available by such Lender to Issuing Bank pursuant to this Section
2.5 in the event that it is determined by a court of competent jurisdiction that
the payment with respect to a Letter of Credit (i) constituted gross negligence
or willful misconduct on the part of Issuing Bank, or (ii) was made after
presentation to Issuing Bank of a request not strictly complying with the terms
and conditions of such Letter of Credit, unless such payment was required by
law, regulation, court order or decree.
-27-
(l) Conflict with Letter of Credit Documents. In the event of any
----------------------------------------
conflict between the provisions of this Agreement and any document or instrument
executed in connection with the issuance of any Letter of Credit (including any
credit application), the terms and provisions of this Agreement shall control.
SECTION 2.6 Term Loan.
---------
(a) Term Loan. Subject to the terms and conditions of this Agreement,
---------
each Lender severally but not jointly agrees to make such Lender's Term Loan
Commitment Percentage of the Term Loan on the Closing Date. Borrowers jointly
and severally agree to make principal payments on the Term Loan in the aggregate
principal amounts of the applicable Scheduled Term Installments.
(b) Procedures for Advances of Term Loan. Maxim, on behalf of the
------------------------------------
Borrowers, shall request the Term Loan to be made on the Closing Date by written
notice on the Closing Date to the Administrative Agent of the amount of such
borrowing. The Administrative Agent shall give notice to each Lender promptly
upon receipt of such notice and of each such Lender's share of the borrowing to
be made pursuant thereto. Each Lender shall make its Term Loan Commitment
Percentage of the Term Loan, available to the Administrative Agent for the
account of Maxim (or such other Borrower as may be specified in the notice
delivered by Maxim pursuant to this subsection (c)) by 11:00 a.m. (Charlotte
time) on the Closing Date in funds immediately available to the Administrative
Agent. The Administrative Agent shall not be obligated to disburse the proceeds
of the Term Loan until each Lender shall have made available to the
Administrative Agent its applicable Term Loan Commitment Percentage of the Term
Loan.
(c) Mandatory Prepayments. Within five (5) Business Days after any
---------------------
disposition by Maxim or its Subsidiaries, whether by sale, lease (including,
without limitation, the sale and lease-back of any asset), transfer, loss,
damage, destruction, condemnation or otherwise, of any or all of the assets of
Maxim or any of its Subsidiaries other than sales of inventory in the ordinary
course of business, Borrowers shall prepay the Term Loan in an amount equal to
the Net Cash Proceeds received by Maxim or any of its Subsidiaries from any such
disposition, unless after giving effect to such disposition the aggregate amount
of Net Cash Proceeds received from such disposition, together with all other
such dispositions (i) during the period commencing on the Closing Date through
and including the Fiscal Year ending January 31, 1998, is less than $2,500,000,
and (ii) during each Fiscal Year after the Fiscal Year ending January 31, 1998,
is less than $5,000,000 for such Fiscal Year. Without limiting the forgoing, to
the extent the Net Cash Proceeds received by Maxim or any of its Subsidiaries
from any disposition at any time exceed the limits set forth in clause (i) and
clause (ii) of the immediately preceding sentence, Borrowers shall prepay the
Term Loan in an amount equal to such excess within five (5) Business Days after
such disposition.
(d) All prepayments made pursuant to subsection (c) above shall be applied
to the Scheduled Term Installments in the inverse order of maturity.
Concurrently with the making of any such payment, Borrowers shall deliver to the
Administrative Agent and Lenders a certificate of Maxim's chief financial
officer demonstrating its calculation of the amount required to be paid. The
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calculation of the amount required to be paid is to be subject to the approval
of the Administrative Agent, in its sole and absolute discretion. Such amounts
prepaid may not be reborrowed.
SECTION 2.7 Notes.
-----
(a) Revolver Notes. Each Lender's Revolver Loans and the joint and
--------------
several obligation of the Borrowers to repay the Revolver Loans made thereto
shall be evidenced by the Revolver Note executed by the Borrowers payable to the
order of such Lender representing the Borrowers' joint and several obligation to
pay such Lender's Revolver Loan Commitment or, if less, the aggregate unpaid
principal amount of all Revolver Loans made and to be made by such Lender to the
Borrowers hereunder, plus interest and all other fees, charges and other amounts
----
due thereon. Each Revolver Note shall be dated the date hereof and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 3.1.
(b) Term Notes. Each Lender's Term Loan and the joint and several
----------
obligation of the Borrowers to repay the Term Loan made thereto shall be
evidenced by the Term Note executed by the Borrowers payable to the order of
such Lender representing the Borrowers' joint and several obligation to pay such
Lender's Term Loan Commitment or, if less, the aggregate unpaid principal
amount of the Term Loan made and to be made by such Lender to the Borrowers
hereunder, plus interest and all other fees, charges and other amounts due
----
thereon. Each Term Note shall be dated the date hereof and shall bear interest
on the unpaid principal amount thereof at the applicable interest rate per annum
specified in Section 3.1.
SECTION 2.8 Termination of Revolver Facility. The Lenders' Revolver Loan
--------------------------------
Commitments under Sections 2.1 and 2.2 shall terminate on the earlier of (a) the
Expiration Date or (b) the date of termination by the Administrative Agent on
behalf of the Lenders pursuant to Section 10.2(a); provided, however, the
--------
Administrative Agent and all of the Lenders in their sole discretion may, by
written notice to the Borrowers, extend the Revolver Facility and the Revolver
Loan Commitments for a period of one (1) year following the Expiration Date,
subject in all respects to prior termination of the Revolver Facility by the
Administrative Agent on behalf of the Lenders pursuant to Section 10.2(a).
SECTION 2.9 Use of Proceeds. The Borrowers shall use the proceeds of the
---------------
Loans (a) to refinance the existing Debt of the Borrowers and (b) for working
capital and general corporate requirements of the Borrowers, including the
payment of certain fees and expenses incurred in connection with the
transactions contemplated hereby.
SECTION 2.10 Security. The Obligations of each Borrower shall be secured
--------
in accordance with the terms of the applicable Security Documents.
SECTION 2.11 Maximum Borrower Liability.
--------------------------
(a) It is the intent of the Borrowers, the Administrative Agent, the
Lenders and any other Person holding any of the Obligations that each Borrower's
maximum obligations hereunder (such
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Borrower's "Maximum Borrower Liability") in any case or proceeding referred to
below (but only in such a case or proceeding) shall not be in excess of:
(i) in a case or proceeding commenced by or against such Borrower
under the Bankruptcy Code on or within one year from the date on which any of
the Obligations of such Borrower are incurred, the maximum amount that would not
otherwise cause the obligations of such Borrower hereunder (or any other
obligations of such Borrower to the Administrative Agent, the Lenders and any
other Person holding any of the Obligations) to be avoidable or unenforceable
against such Borrower under (A) Section 548 of the Bankruptcy Code or (B) any
state fraudulent transfer or fraudulent conveyance act or statute applied in
such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against such Borrower
under the Bankruptcy Code subsequent to one year from the date on which any of
the Obligations of such Borrower are incurred, the maximum amount that would not
otherwise cause the obligations of such Borrower hereunder (or any other
obligations of such Borrower to the Administrative Agent, the Lenders and any
other Person holding any of the Obligations) to be avoidable or unenforceable
against such Borrower under any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding by virtue of
Section 544 of the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against such Borrower
under any law, statute or regulation other than the Bankruptcy Code relating to
dissolution, liquidation, conservatorship, bankruptcy, moratorium, readjustment
of debt, compromise, rearrangement, receivership, insolvency, reorganization or
similar debtor relief from time to time in effect affecting the rights of
creditors generally (collectively, "Other Debtor Relief Law"), the maximum
amount that would not otherwise cause the obligations of such Borrower hereunder
(or any other obligations of such Borrower to the Administrative Agent, the
Lenders and any other Person holding any of the Obligations) to be avoidable or
unenforceable against such Borrower under such Other Debtor Relief Law,
including, without limitation, any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding. (The
substantive state or federal laws under which the possible avoidance or
unenforceability of the obligations of any Borrower hereunder (or any other
obligations of such Borrower to the Administrative Agent, the Lenders and any
other Person holding any of the Obligations) shall be determined in any such
case or proceeding shall hereinafter be referred to as the "Avoidance
Provisions").
(b) To the extent set forth in Section 2.11(a), but only to the extent that
the Obligations of any Borrower hereunder, or the transfers made by such
Borrower under the Pledge Agreements, the Security Agreement or the Trademark
Assignment, would otherwise be subject to avoidance under any Avoidance
Provisions if such Borrower is not deemed to have received valuable
consideration, fair value, fair consideration or reasonably equivalent value for
such transfers or obligations, or if such transfers or obligations of any
Borrower hereunder would render such Borrower insolvent, or leave such Borrower
with an unreasonably small capital or unreasonably small assets to conduct its
business, or cause such Borrower to have incurred debts (or to have intended to
have incurred debts) beyond its ability to pay such debts as they mature, in
each case as of the time any of the obligations of such Borrower are deemed to
have been incurred and transfers
-30-
made under such Avoidance Provisions, then the obligations of such Borrower
hereunder shall be reduced to that amount which, after giving effect thereto,
would not cause the Obligations of such Borrower hereunder (or any other
obligations of such Borrower to the Administrative Agent, the Lenders or any
other Person holding any of the Obligations), as so reduced, to be subject to
avoidance under such Avoidance Provisions. This Section 2.11(b) is intended
solely to preserve the rights hereunder of the Administrative Agent, the Lenders
and any other Person holding any of the Obligations to the maximum extent that
would not cause the obligations of the Borrowers hereunder to be subject to
avoidance under any Avoidance Provisions, and no Borrower nor any other Person
shall have any right, defense, offset, or claim under this Section 2.11(b) as
against the Administrative Agent, the Lenders or any other Person holding any of
the Obligations that would not otherwise be available to such Person under the
Avoidance Provisions.
(c) Each Borrower agrees that the Obligations may at any time and from
time to time exceed the Maximum Borrower Liability of such Borrower, and may
exceed the aggregate Maximum Borrower Liability of all Borrowers hereunder,
without impairing this Agreement or any provision contained herein or affecting
the rights and remedies of the Lenders and the Administrative Agent hereunder.
(d) In the event any Borrower (a "Funding Borrower") shall make any
payment or payments under this Agreement or shall suffer any loss as a result of
any realization upon any collateral granted by it to secure its obligations
hereunder, each other Borrower (each, a "Contributing Borrower") shall
contribute to such Funding Borrower an amount equal to such payment or payments
made, or losses suffered, by such Funding Borrower determined as of the date on
which such payment or loss was made multiplied by the ratio of (i) the Maximum
-------------
Borrower Liability of such Contributing Borrower (without giving effect to any
right to receive any contribution or other obligation to make any contribution
hereunder), to (ii) the aggregate Maximum Borrower Liability of all Borrowers
(including the Funding Borrowers) hereunder (without giving effect to any right
to receive, or obligation to make, any contribution hereunder). Nothing in this
Section 2.11(d) shall affect each Borrower's joint and several liability to the
Administrative Agent and the Lenders for the entire amount of its Obligations.
Each Borrower covenants and agrees that its right to receive any contribution
hereunder from a Contributing Borrower shall be subordinate and junior in right
of payment to all obligations of the Borrowers to the Administrative Agent and
Lenders hereunder.
SECTION 2.12 Waiver of Subrogation. Except for the contribution provided
---------------------
for in Section 2.11(d) above, each Borrower hereby waives, to the fullest extent
possible, as against each other Borrower and its assets, any and all rights,
whether at law, in equity, by agreement or otherwise, to subrogation, indemnity,
reimbursement, contribution, or any other similar claim, cause of action or
remedy that otherwise would arise out of such Borrower's payment or performance
of the Obligations. The preceding waiver is intended by each Borrower, the
Lenders and the Administrative Agent to be for the benefit of each other
Borrower and any of their successors or assigns as an absolute defense, other
than under Section 2.11(d), to any action by any such Borrower against any other
Borrower or its assets.
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ARTICLE III
GENERAL LOAN PROVISIONS
-----------------------
SECTION 3.1 Interest.
--------
(a) Interest Rate Options. Loans made on the Closing Date and on the first
---------------------
two (2) Business Days thereafter shall be Base Rate Loans and shall bear
interest at the Base Rate. During the Initial Interest Rate Period, at the
election of the Borrowers, all Loans shall be either Base Rate Loans or LIBOR
Rate Loans with Interest Periods of one month. Commencing on the first day of
the Initial Interest Rate Period, subject to the provisions of this Section 3.1,
at the election of the Borrowers with respect to whether a Loan will be a Base
Rate Loan or a LIBOR Rate Loan, the Loans shall bear interest at the Base Rate
or the LIBOR Rate plus the Applicable Margin (the "Applicable Margin") as set
----
forth below in this Section 3.1. On behalf of the Borrowers, Maxim shall
select the rate of interest and Interest Period, if any, applicable to any Loan
at the time a Notice of Borrowing is given pursuant to Section 2.2 or at the
time a Notice of Conversion/Continuation is given pursuant to Section 3.2. Each
Loan or portion thereof bearing interest based on the Base Rate shall be a "Base
Rate Loan" and each Loan or portion thereof bearing interest based on the LIBOR
Rate shall be a "LIBOR Rate Loan." Any Loan or any portion thereof as to which
the applicable Borrower or Borrowers have not duly specified an interest rate as
provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan, Maxim, on
----------------
behalf of the Borrowers, by giving notice at the times described in Section
3.1(a), shall elect an interest period (each, an "Interest Period") to be
applicable to such Loan, which Interest Period shall be a period of one, two,
three, or six months; provided that:
--------
(A) during the Initial Interest Rate Period, all LIBOR Rate Loans
shall have an Interest Period of one month;
(B) the Interest Period shall commence on the date of advance of or
conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence
on the date on which the immediately preceding Interest Period expires;
(C) if any Interest Period would otherwise expire on a day that is not
a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, that, with respect to any LIBOR Rate Loan, if any
--------
Interest Period would otherwise expire on a day that is not a Business Day
but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the immediately preceding
Business Day;
(D) with respect to any LIBOR Rate Loan, any Interest Period that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically
-32-
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period;
(E) no Interest Period for Revolver Loans shall extend beyond the
Revolver Facility Termination Date and no Interest Period for the Term Loan
shall be selected which, in connection with mandatory principal repayments
pursuant to Section 2.4, would cause the early termination of such Interest
Period; and
(F) there shall be no more than seven (7) Types of LIBOR Rate Loans
outstanding at any time; a "Type" of Loan shall refer to LIBOR Rate Loans
with Interest Periods beginning and ending on the same date.
(c) Applicable Margin. The Applicable Margin with respect to Revolver Loans
-----------------
and the Term Loan shall vary from time to time, beginning with the delivery by
Borrowers pursuant to Section 4.2(e)(i) of the quarterly financial statements of
Maxim and its Subsidiaries for the fiscal quarter ending July 31, 1997. At the
end of the fiscal quarter following such delivery and at the end of each fiscal
quarter thereafter, the Applicable Margin with respect to Revolver Loans and the
Term Loan shall be determined for the prospective fiscal quarter at the end of
each immediately preceding fiscal quarter by reference to the ratio of Total
Debt of Maxim and Subsidiaries as of the end of such fiscal quarter to
Consolidated EBITDAR for Maxim and Subsidiaries for the period of four
consecutive fiscal quarters ending on the last day of such fiscal quarter, as
follows:
Total Debt/EBITDAR LIBOR Margin Base Rate Margin
------------------ ------------- -----------------
Greater than or equal to 3.75 1.25% 0%
to 1.0
Greater than or equal to 2.75 1.00% 0%
to 1.0 but less than 3.75 to
1.0
Greater than or equal to 1.50 .75% 0%
to 1.0 but less than 2.75 to
1.0
Less than 1.5 to 1.0 .50% 0%
(d) Adjustments to Applicable Margin. Adjustments, if any, in the
--------------------------------
Applicable Margin shall be made by the Administrative Agent five (5) Business
Days after receipt by the Administrative Agent of quarterly financial statements
for Maxim and its Subsidiaries and the accompanying Officer's Compliance
Certificate setting forth the ratio of Total Debt to Consolidated EBITDAR for
Maxim and its Subsidiaries as of the most recent fiscal quarter end (calculated
as provided in subsection (c) above). Subject to Section 3.1(e), in the event
Maxim fails to deliver such financial statements and certificate within the time
required by Section 6.2
-33-
hereof, the Applicable Margin for LIBOR Rate Loans and for Base Rate Loans, as
applicable, shall be the highest Applicable Margin as set forth above for such
type of Loan until five (5) Business Days after the delivery of such financial
statements and certificate.
(e) Default Rate. Upon the occurrence and during the continuance of an
------------
Event of Default, (i) the Borrowers shall no longer have the option to request
LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at a
rate per annum two percent (2%) in excess of the rate then applicable to LIBOR
Rate Loans until the end of the applicable Interest Period and shall be
converted on such date to Base Rate Loans and shall bear interest thereafter at
a rate equal to two percent (2%) in excess of the rate then applicable to Base
Rate Loans, and (iii) all outstanding Base Rate Loans shall bear interest at a
rate per annum equal to two percent (2%) in excess of the rate then applicable
to Base Rate Loans. Interest shall continue to accrue on the Notes after the
filing by or against any Borrower of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
(f) Interest Payment and Computation. Interest on each Revolver Loan shall
--------------------------------
be payable in arrears on each applicable Interest Payment Date. Interest on
Base Rate Loans shall be computed on the basis of a year of 365 or 366 days, as
the case may be, and assessed for the actual number of days elapsed, and
interest on LIBOR Rate Loans shall be computed on the basis of a year of 360
days and assessed for the actual number of days elapsed. All payments of fees
(including without limitation the LOC Facing Fee and the LOC Issuance Fee) under
this Agreement shall be computed on the basis of a year of 360 days and assessed
for the actual number of days elapsed.
(g) Maximum Rate. In no contingency or event whatsoever shall the
------------
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative
Agent's option promptly refund to the applicable Borrower or Borrowers any
interest received by Lenders in excess of the maximum lawful rate or shall apply
such excess to the principal balance of the Obligations. It is the intent
hereof that the Borrowers not pay or contract to pay, and that neither the
Administrative Agent nor any Lender receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by the Borrowers under Applicable Law.
SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans.
--------------------------------------------------------
After the Initial Interest Rate Period, provided that no Default or Event of
Default has occurred and is then continuing, the Borrowers shall have the option
to (a) convert at any time all or any portion of their outstanding Base Rate
Loans in a principal amount equal to $3,000,000 or any whole multiple of
$1,000,000 in excess thereof into one or more LIBOR Rate Loans, (b) upon the
expiration of any Interest Period, convert all or any part of their outstanding
LIBOR Rate Loans
-34-
in a principal amount equal to $1,000,000 or a whole multiple of $500,000 in
excess thereof into Base Rate Loans, or (c) upon the expiration of any Interest
Period, continue any LIBOR Rate Loan in a principal amount of $3,000,000 or any
whole multiple of $1,000,000 in excess thereof as a LIBOR Rate Loan. Whenever
the Borrowers desire to convert or continue Loans as provided above, Maxim, on
behalf of the Borrowers, shall give the Administrative Agent irrevocable prior
written notice in the form attached hereto as Exhibit C (a "Notice of
---------
Conversion/Continuation") not later than 11:00 a.m. (Charlotte time) three (3)
Business Days, in the case of a conversion to or a continuation of LIBOR Rate
Loans, and one (1) Business Day, in the case of a conversion to Base Rate Loans,
before the day on which a proposed conversion or continuation of such Loan is to
be effective specifying (i) the Loans to be converted or continued and, with
respect to any LIBOR Rate Loan to be converted or continued, the last day of the
current Interest Period therefor, (ii) the effective date of such conversion or
continuation (which shall be a Business Day), (iii) the principal amount of such
Loans to be converted or continued and (iv) with respect to a conversion to or a
continuation of LIBOR Rate Loans, the Interest Period to be applicable thereto.
The Administrative Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation.
SECTION 3.3 Fees.
----
(a) Commitment Fee. Commencing on the Closing Date and continuing through
--------------
and including the Revolver Facility Termination Date, the Borrowers shall pay to
the Administrative Agent, for the account of the Lenders, a non-refundable
commitment fee at a rate per annum (based on a 360 day year) calculated with
respect to the average daily unused portion of the Swingline Committed Amount
and the aggregate Revolver Loan Commitment. At the Closing Date the initial
percentage rate for the Commitment Fee shall be determined by reference to the
table below and based upon the ratio of Total Debt of Maxim and its Subsidiaries
for the fiscal quarter ending on July 31, 1997, to Consolidated EBITDAR for
Maxim and its Subsidiaries for the period of four consecutive fiscal quarters
ending on July 31, 1997, as reflected on the financial statements required to be
delivered to Lender pursuant to Section 4.2(e)(i). For each fiscal quarter
following the fiscal quarter ending July 31, 1997, the percentage rate shall be
determined for such fiscal quarter by reference to the ratio of Total Debt of
Maxim and Subsidiaries as of the end of such fiscal quarter to Consolidated
EBITDAR for Maxim and Subsidiaries for the period of four consecutive fiscal
quarters ending on the last day of such fiscal quarter, as follows:
Total Debt/EBITDAR Commitment Fee Percentage
------------------ -------------------------
Greater than or equal to .25%
2.75 to 1.0
Greater than or equal to 1.50
to 1.0 but less than 2.75% .225%
to 1.0
Less than 1.50 to 1 .1875%
-35-
The commitment fee shall be payable in arrears on the last Business Day of each
calendar quarter commencing September 30, 1997, and on the Revolver Facility
Termination Date. Such commitment fee shall be distributed by the
Administrative Agent between the Lenders pro rata in accordance with the
Lenders' respective Revolver Loan Commitment Percentages.
(b) Agent's Fees. In order to compensate the Administrative Agent for its
------------
obligations hereunder, the Borrowers jointly and severally agree to pay on the
Closing Date to the Administrative Agent and First Union Capital Markets Corp.,
for their own account, the fees set forth in the Commitment and Term Sheet
between First Union and Maxim dated May 28, 1997 and the Fee Letter executed by
Maxim in connection therewith (collectively, the "Term Sheet").
(c) Letter of Credit Fees. Borrowers jointly and severally agree to pay
---------------------
the following fees:
(i) the LOC Facing Fee, to be paid to the Issuing Bank for its own
account in accordance with Section 2.5(a);
(ii) the LOC Issuance Fee, to be paid to the Administrative Agent
for the account of the Lenders in accordance with Section 2.5(e) hereof;
(iii) to the Issuing Bank, for its own account, upon each drawing by
any Borrower under any Letter of Credit, the sum of $100, payable on each
draw date; and
(iv) to the Issuing Bank, for its own account, such other
administrative and operational fees, charges, and expenses customarily
charged by the Issuing Bank with respect to the issuance, handling, and
administration of payment under letters of credit.
SECTION 3.4 Manner of Payment.
-----------------
(a) Allocation of Payments. Each payment (including repayments described
----------------------
in Article II) by any Borrower on account of the principal of or interest on the
Loans or of any fee (other than the payments made to the Issuing Bank for its
own account, which shall be paid in accordance with the immediately succeeding
sentence) commission or other amounts payable to the Lenders under this
Agreement or any Note shall be made in Dollars not later than 11:00 a.m.
(Charlotte time) on the date specified for payment under this Agreement to the
Administrative Agent for the account of the Lenders to be distributed pro rata
among the Revolver Loans and the Term Loan and among such Lenders in accordance
with their respective Revolver Loan Commitment Percentages and Term Loan
Commitment Percentages, as applicable, at the Administrative Agent's Office, in
immediately available funds, and shall be made without any set-off, counterclaim
or deduction whatsoever. Each payment to be made for the account of the Issuing
Bank shall be made in Dollars not later than 1:00 p.m. (Charlotte time) on the
date specified for payment under this Agreement or subsequently by the Issuing
Bank to the Issuing Bank for its own account, at the Issuing Bank's Office, in
immediately available funds, and shall
-36-
be made without any set-off, counterclaim or deduction whatsoever. Any payment
received after such times but before 2:00 p.m. (Charlotte time) on such day
shall be deemed a payment on such date for the purposes of Section 10.1, but for
all other purposes shall be deemed to have been made on the next succeeding
Business Day. Any payment received after 2:00 p.m. (Charlotte time) shall be
deemed to have been made on the next succeeding Business Day for all purposes.
(b) Pro Rata Treatment. Upon receipt by the Administrative Agent of each
------------------
such payment, the Administrative Agent shall credit each Lender's account with
its pro rata share of such payment in accordance with such Lender's Revolver
Loan Commitment Percentage and Term Loan Commitment Percentage, as applicable,
and shall wire advice of the amount of such credit to each Lender. Each payment
to the Administrative Agent of its fees shall be made in like manner, but for
the account of the Administrative Agent.
(c) Non-Business Days. Subject to Section 3.1(b), if any payment under
-----------------
this Agreement or any Note shall be specified to be made upon a day which is not
a Business Day, it shall be made on the next succeeding day which is a Business
Day and such extension of time shall in such case be included in computing any
interest if payable along with such payment.
SECTION 3.5 Crediting of Payments and Proceeds. In the event that any
----------------------------------
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 10.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be distributed pro rata among the Revolver
Facility 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 Notes and any
termination payments due in respect of a Hedging Agreement with any Lender (pro
rata in accordance with all such amounts due), then to the principal amount of
the Notes, in that order.
SECTION 3.6 Nature of Obligations of Lenders Regarding Loans; Assumption
------------------------------------------------------------
by Administrative Agent. The obligations of the Lenders under this Agreement to
-----------------------
make the Loans are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.2 and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrowers on such date a corresponding
amount. If such amount is made available to the Administrative Agent on a date
after such borrowing date, such Lender shall pay to the Administrative Agent on
demand an amount, until paid, equal to such Lender's applicable Revolver Loan
Commitment Percentage of such borrowing and interest thereon at a rate per annum
equal to the daily average Federal Funds Rate during such period as determined
by the Administrative Agent. A certificate
-37-
of the Administrative Agent with respect to any amounts owing under this Section
shall be conclusive, absent manifest error. If such Lender's applicable Revolver
Loan Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three (3) Business Days of such
borrowing date, the Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent with interest thereon at the
rate per annum then applicable to such Loan hereunder, on demand, from the
applicable Borrower or Borrowers. The failure of any Lender to make its
applicable Revolver Loan Commitment Percentage of any Loan available shall not
relieve it or any other Lender of its obligation, if any, hereunder to make its
applicable Revolver Loan Commitment Percentage of such Loan available on such
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make its applicable Revolver Loan Commitment Percentage of such Loan
available on the borrowing date.
SECTION 3.7 Changed Circumstances.
---------------------
(a) Circumstances Affecting LIBOR Rate Availability. If with respect to
-----------------------------------------------
any Interest Period the Administrative Agent or any Lender (after consultation
with Administrative Agent) shall determine that by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
Eurodollars in the applicable amounts are not being offered (through Telerate
Page 3750 or otherwise) to the Administrative Agent or such Lender for such
Interest Period, then the Administrative Agent shall forthwith give notice
thereof to the Borrowers. Thereafter, until the Administrative Agent notifies
the Borrowers that such circumstances no longer exist, the obligation of the
Lenders to make LIBOR Rate Loans, and the right of the Borrowers to convert any
Loan to or continue any Loan as a LIBOR Rate Loan, shall be suspended, and the
applicable Borrower or Borrowers shall repay in full (or cause to be repaid in
full) the then-outstanding principal amount of each such LIBOR Rate Loan,
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBOR Rate Loan or convert the then
outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan,
if available, as of the last day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the
--------------------------------------
introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give notice
to the Borrowers and the other Lenders. Thereafter, until the Administrative
Agent notifies the Borrowers that such circumstances no longer exist (which
notification shall be given promptly, but in any event within twenty (20) days
after the Administrative Agent obtains actual knowledge that such circumstances
no longer exist), (i) the obligations of the Lenders to make LIBOR Rate Loans
and the right of the Borrowers to convert any Loan or continue any Loan as a
LIBOR Rate Loan shall be suspended and thereafter the
-38-
Borrowers may select only Base Rate Loans hereunder, and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto as a LIBOR Rate Loan, the
applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan
for the remainder of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction of, or
---------------
any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their respective
Lending Offices) to any tax, duty or other charge with respect to any LIBOR Rate
Loan or any Note or shall change the basis of taxation of payments to any of the
Lenders (or any of their respective Lending Offices) of the principal of or
interest on any LIBOR Rate Loan or any Note or any other amounts due under this
Agreement in respect thereof (except for changes in the rate of tax on the
overall net income of any of the Lenders or any of their respective Lending
Offices imposed by the jurisdiction in which such Lender is organized or is or
should be qualified to do business or such Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal Reserve
System), special deposit, insurance or capital or similar requirement against
assets of, deposits with or for the account of, or credit extended by any of the
Lenders (or any of their respective Lending Offices) or shall impose on any of
the Lenders (or any of their respective Lending Offices) or the foreign exchange
and interbank markets any other condition affecting any LIBOR Rate Loan or any
Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or to reduce the yield or amount of
any sum received or receivable by any of the Lenders under this Agreement or
under the Notes in respect of a LIBOR Rate Loan, then such Lender shall promptly
notify the Administrative Agent, and the Administrative Agent shall promptly
notify the Borrowers of such fact and demand compensation therefor and, within
fifteen (15) days after such notice by the Administrative Agent, the Borrowers
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction. The Administrative Agent will
promptly notify the Borrowers of any event of which it has knowledge that will
entitle such Lender to compensation pursuant to this Section 3.7(c); provided,
--------
that the Administrative Agent shall incur no liability whatsoever to the Lenders
or the Borrowers in the event it fails to do so. A certificate of the
Administrative Agent setting forth the basis for determining such additional
amount or amounts necessary to compensate such Lender or Lenders shall be
conclusively presumed to be correct save for manifest error.
SECTION 3.8 Indemnity. The Borrowers jointly and severally shall and
---------
hereby do indemnify each of the Lenders against any loss or expense (including
without limitation any
-39-
foreign exchange costs) which may arise or be attributable to each Lender's
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund or maintain the Loans (a) as a consequence of any failure by the Borrowers
to make any payment when due of any amount due hereunder in connection with a
LIBOR Rate Loan, (b) due to any failure of the Borrowers to borrow on a date
specified therefor in a Notice of Borrowing or Notice of Continuation/Conversion
with respect to any LIBOR Rate Loan or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of the
Interest Period therefor, including without limitation, any payment, prepayment
or conversion of any LIBOR Rate Loan required to be made in connection with the
assignment of the Loan to an Eligible Assignee during the Initial Interest Rate
Period. Each Lender's calculations of any such loss or expense shall be
furnished to the Borrowers and shall be conclusive, absent manifest error.
SECTION 3.9 Capital Requirements. If either (a) the introduction of, or
--------------------
any change in, or in the interpretation of, any Applicable Law or (b) compliance
with any guideline or request from any central bank or comparable agency or
other Governmental Authority (whether or not having the force of law), has or
would have the effect of reducing the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, any
Lender or any corporation controlling such Lender as a consequence of, or with
reference to the Commitments and other commitments of this type, below the rate
which such Lender or such other corporation could have achieved but for such
introduction, change or compliance, then within five (5) Business Days after
written demand by any such Lender, the Borrowers shall pay to such Lender from
time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate
as to such amounts submitted to the Borrowers and the Administrative Agent by
such Lender, shall, in the absence of manifest error, be presumed to be correct
and binding for all purposes.
SECTION 3.10 Taxes.
-----
(a) Payments Free and Clear. Any and all payments by the Borrowers
-----------------------
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholding, and all liabilities with respect thereto excluding, (i)
in the case of each Lender and the Administrative Agent, income and franchise
taxes imposed by the jurisdiction under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized or is or should be
qualified to do business or any political subdivision thereof and (ii) in the
case of each Lender, income and franchise taxes imposed by the jurisdiction of
such Lender's Lending Office or any political subdivision thereof (all such non-
excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Administrative Agent, (A) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.10) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the amount such party would have received
had no such deductions been made, (B) such Borrower shall make such deductions,
(C) such Borrower
-40-
shall pay the full amount deducted to the relevant taxing authority or other
authority in accordance with Applicable Law, and (D) such Borrower shall deliver
to the Administrative Agent evidence of such payment to the relevant taxing
authority or other authority in the manner provided in Section 3.10(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay any
---------------------
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the other Loan Documents, or the perfection of any rights or security
interest in respect thereto (hereinafter referred to as "Other Taxes").
(c) Indemnity. The Borrowers jointly and severally shall and do hereby
---------
indemnify each Lender and the Administrative Agent for the full amount of Taxes
and Other Taxes (including, without limitation, any Taxes and Other Taxes
imposed by any jurisdiction on amounts payable under this Section 3.10) paid by
such Lender or Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
-------------------
payment of Taxes or Other Taxes, the affected Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 12.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
---------------------
jurisdiction other than the United States or any state thereof shall deliver to
the Borrowers, with a copy to the Administrative Agent, within five days after
the Closing Date or concurrently with the delivery of the relevant Assignment
and Acceptance, as applicable, (i) two United States Internal Revenue Service
Forms 4224 or Forms 1001, as applicable (or successor forms), properly completed
and certifying in each case that such Lender is entitled to a complete exemption
from withholding or deduction for or on account of any United States federal
income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding taxes. Each such Lender further agrees to deliver to
the Borrowers, with a copy to the Administrative Agent, a Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms or manner of certification, as
the case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrowers, certifying in the case
of a Form 1001 or 4224 that such Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes (unless in any such case an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders such forms inapplicable
or the exemption to which such
-41-
forms relate unavailable and such Lender notifies the Borrowers and the
Administrative Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(f) Survival. Without prejudice to the survival of any other agreement of
--------
the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 3.10 shall survive the payment in full of the
Obligations and the termination of the Commitments.
ARTICLE IV
CLOSING: CONDITIONS OF CLOSING AND BORROWING
--------------------------------------------
SECTION 4.1 Closing. The closing shall take place at the offices of
-------
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP at First ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
N.E., 23rd Floor, Atlanta, Georgia at 10:00 a.m. on the Closing Date.
SECTION 4.2 Conditions to Closing and Initial Loan. The obligations of
--------------------------------------
(i) the Lenders and the Administrative Agent to close this Agreement, (ii) the
Lenders to make the initial Loans, and (iii) the Issuing Bank to issue, extend
or renew any Conventional Letters of Credit, are subject to the satisfaction of
each of the following conditions:
(a) Executed Loan Documents. (i) This Agreement, (ii) the Notes, (iii) the
-----------------------
Intercompany Subordination Agreement, (iv) the Security Agreement, (v) the
Trademark Assignment, (vi) the Pledge Agreements, (vii) the Partnership Security
Agreements, (viii) the Aircraft Chattel Mortgage, and (ix) the Collateral
Assignment Agreement shall have been duly authorized and executed by the parties
thereto in form and substance satisfactory to the Administrative Agent, shall be
in full force and effect and no default shall exist thereunder, and the
Borrowers shall have delivered original counterparts thereof to the
Administrative Agent.
(b) Closing Certificates; etc.
-------------------------
(i) Officer's Certificate. The Administrative Agent shall have
---------------------
received a certificate from the chief executive officer and chief financial
officer of Maxim, on behalf of the Borrowers, in form and substance reasonably
satisfactory to the Administrative Agent, to the effect that all representations
and warranties of the Borrowers contained in this Agreement and the other Loan
Documents are true, correct and complete; that the Borrowers are not in
violation of any of the covenants contained in this Agreement and the other Loan
Documents; that, after giving effect to the transactions contemplated by this
Agreement, no Default or Event of Default has occurred and is continuing; that
the Borrowers have satisfied each of the closing conditions to be satisfied
thereby; and that the Borrowers have filed all required tax returns and owe no
delinquent taxes.
-42-
(ii) Solvency Certificate. The Administrative Agent shall have
--------------------
received a certificate from the chief financial officer and Executive Vice-
President Finance and Treasurer of Maxim, on behalf of the Borrowers, in form
and substance reasonably satisfactory to the Administrative Agent, to the effect
that Maxim and each Subsidiary of Maxim is, as of the Closing Date, Solvent.
(iii) Certificate of Secretary of each Borrower. The Administrative
-----------------------------------------
Agent shall have received a certificate of the secretary or assistant secretary
of each Borrower certifying, as applicable, that attached thereto is a true and
complete copy of the articles of incorporation or other charter documents of
such Borrower and all amendments thereto (such charter documents, in the case of
each New Subsidiary, shall be certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation for each New
Subsidiary); that attached thereto is a true and complete copy of the bylaws of
such Borrower as in effect on the date of such certification; that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of such Borrower, authorizing the borrowings contemplated hereunder
and the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party; and as to the incumbency and genuineness of
the signature of each officer of such Borrower executing Loan Documents to which
such Borrower is a party.
(iv) Certificates of Good Standing. The Administrative Agent shall
-----------------------------
have received certificates as of a recent date of the good standing of each
Borrower under the laws of their respective jurisdictions of organization.
(v) Initial Borrowing Base Certificate. Prior to any funding of
----------------------------------
the initial Loans or the issuance, extension or renewal of any Conventional
Letters of Credit, the Administrative Agent shall have received the initial
Borrowing Base certificate to be delivered by the Borrowers pursuant to Section
6.4, dated as of the Closing Date. The initial Borrowing Base certificate shall
be accompanied by a certificate of Maxim's chief financial officer demonstrating
his calculation of the product of 4 multiplied by EBITDAR as required under the
definition of "Borrowing Base" in Section 1.1 hereof.
(vi) Accounts Designation Letter. The Accounts Designation Letter
---------------------------
to be delivered by the Borrowers pursuant to Section 2.2, dated as of the date
hereof.
(vii) Opinions of Counsel. The Administrative Agent shall have
-------------------
received favorable opinions of counsel to the Borrowers addressed to the
Administrative Agent and Lenders with respect to the Borrowers and such other
Persons, the Loan Documents, the transactions contemplated thereby, regulatory
matters and such other matters as the Administrative Agent and the Lenders may
reasonably request, reasonably satisfactory in form and substance to the
Administrative Agent and Lenders.
(c) Collateral.
----------
(i) Filings and Recordings. All Uniform Commercial Code financing
----------------------
statements that are necessary to perfect the Liens of the Administrative Agent
and the Lenders in
-43-
the Collateral described in the Security Documents shall have been duly
authorized and executed by the appropriate Borrowers, in each case, in form and
substance satisfactory to the Administrative Agent. The Administrative Agent
shall have received all of such financing statements in the appropriate form
required for filing for recording in all appropriate jurisdictions and upon such
filing the security interests shall constitute perfected first priority Liens in
the Collateral.
(ii) Pledged Stock. The Administrative Agent shall have received
-------------
original stock certificates evidencing the capital stock pledged pursuant to the
Pledge Agreements, together with an appropriate undated stock power and
irrevocable proxy for each certificate duly executed in blank by the registered
owner thereof.
(iii) Insurance. The Administrative Agent shall have received
---------
certificates of insurance and certified copies of insurance policies in the form
required under Section 7.3 and the Security Documents and otherwise in form and
substance reasonably satisfactory to the Administrative Agent.
(d) Consents; No Adverse Change.
---------------------------
(i) Governmental and Third Party Approvals. All necessary
--------------------------------------
approvals, authorizations and consents, if any be required, of any Person and of
all Governmental Authorities and courts having jurisdiction with respect to the
execution and delivery of this Agreement and the other Loan Documents shall have
been obtained.
(ii) Permits and Licenses. All permits and licenses, including
--------------------
permits and licenses required under Applicable Laws, necessary to the conduct of
business by the Borrowers and their Subsidiaries shall have been obtained.
(iii) No Injunction, Etc. No action, proceeding, investigation,
------------------
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the Administrative Agent's
reasonable discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.
(iv) No Material Adverse Change. Since January 31, 1997, there shall
--------------------------
not have occurred any material adverse change in the condition (financial or
otherwise), operations, properties, business or prospects of Maxim, Image or any
of their respective Subsidiaries, or any event or condition that has had or
could be reasonably expected to have a Material Adverse Effect.
(v) No Event of Default. No Default or Event of Default shall have
-------------------
occurred and be continuing.
-44-
(e) Financial Matters.
-----------------
(i) Financial Statements. The Administrative Agent and each Lender
--------------------
shall have received recent annual and interim financial statements and other
financial information with respect to Maxim and its Subsidiaries prepared in
accordance with GAAP. Without limitation of the foregoing, the Administrative
Agent and each Lender shall have received (A) audited financial statements for
Maxim and its Subsidiaries for the Fiscal Year ended January 31, 1997 and (B)
unaudited financial statements for Maxim and its Subsidiaries for the fiscal
quarter ended April 30, 1997 and July 31, 1997.
(ii) Financial Condition Certificate. Maxim, on behalf of the
-------------------------------
Borrowers, shall have delivered to the Administrative Agent a certificate, in
form and substance satisfactory to the Administrative Agent, and certified as
accurate in all material respects by the chief executive officer or chief
financial officer of Maxim, to the effect that (A) attached thereto is a
balance sheet of Maxim and its Subsidiaries for the fiscal quarter ended July
31, 1997 setting forth the financial condition of Maxim and its Subsidiaries on
a Consolidated basis as of that date, (B) the financial projections previously
delivered to the Administrative Agent represent the good faith opinions of the
Borrowers and senior management thereof as to the projected results contained
therein, and (C) that Maxim and each of its Subsidiaries singly (i) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as they
mature, (ii) owns property having a value, both at fair valuation and at present
fair saleable value, greater than the amount required to pay its probable
liabilities (including contingencies and its liabilities with respect to the
Obligations) , and (iii) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature.
(iii) Payment at Closing. There shall have been paid by the Borrowers
------------------
to the Administrative Agent and the Lenders the fees set forth or referenced in
Section 3.3 and any other accrued and unpaid fees or commissions due hereunder
(including, without limitation, legal fees and expenses), and to any other
Person such amount as may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of any of the
Loan Documents. The Administrative Agent shall have received duly authorized
and executed copies of the Term Sheet referred to in Section 3.3(b).
(f) Miscellaneous.
-------------
(i) Refinanced Facilities. Prior to any funding of the initial Loans
---------------------
or the issuance, extension or renewal of any Conventional Letters of Credit, the
Administrative Agent shall have received evidence, in form and substance
reasonably satisfactory to the Administrative Agent, that with proceeds of the
initial Loans the obligations of Maxim and its Subsidiaries evidenced by the
Credit Agreement, dated as of August 30, 1996, as amended, among Maxim, its
Subsidiaries party thereto and First Union have been fully paid, satisfied and
discharged.
-45-
(ii) Notice of Borrowing. Prior to any funding of the initial Loans
-------------------
or the issuance, extension or renewal of any Conventional Letters of Credit, the
Administrative Agent shall have received written instructions from Maxim, on
behalf of the Borrowers, directing the payment of any proceeds of Loans made
under this Agreement that are to be made on the Closing Date.
(iii) Proceedings and Documents. All opinions, certificates and other
-------------------------
instruments and all proceedings in connection with the transactions contemplated
by this Agreement shall be reasonably satisfactory in form and substance to the
Lenders. The Lenders shall have received copies of all other instruments and
other evidence as the Lenders may reasonably request, in form and substance
reasonably satisfactory to the Lenders, with respect to the transactions
contemplated by this Agreement and the taking of all actions in connection
therewith.
(iv) Due Diligence and Other Documents. The Borrowers shall have
---------------------------------
delivered to the Administrative Agent such other documents, certificates and
opinions as the Administrative Agent reasonably request.
(v) Letter Agreement. Maxim, on behalf of the Borrowers, shall have
----------------
entered into a letter agreement (the "Letter Agreement") with the Administrative
Agent, dated as of the date hereof, and setting forth certain actions required
to be taken by Maxim after the Closing Date, and said letter agreement shall be
in full force and effect.
SECTION 4.3 Conditions to All Loans and Issuance of Conventional Letters
------------------------------------------------------------
of Credit. The obligations of the Lenders to make any Loan, and of the Issuing
---------
Bank to issue or extend or renew any Conventional Letters of Credit, are subject
to the satisfaction of the following conditions precedent on the relevant
borrowing or issue date:
(i) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties contained in Article V shall be true and correct
on and as of such borrowing date with the same effect as if made on and as of
such date, except to the extent that such representations and warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct on and as of such earlier date.
(ii) No Existing Default. No Default or Event of Default shall have
-------------------
occurred and be continuing hereunder on the borrowing date with respect to such
Loan or after giving effect to the Loans to be made on such date.
SECTION 4.4 Conditions to Issuance of Special Purpose Letter of Credit.
----------------------------------------------------------
The obligation of the Issuing Bank to issue the Special Purpose Letter of Credit
is subject to the satisfaction of the following conditions precedent on the
relevant issue date:
(i) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties contained in Article V shall be true and correct
on and as of such issue date with the same effect as if made on and as of such
date, except to the extent that such representations and
-46-
warranties relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct on and as of such earlier date.
(ii) No Existing Default. No Default or Event of Default shall have
-------------------
occurred and be continuing hereunder on the borrowing date with respect to such
Loan or after giving effect to the Loans to be made on such date.
(iii) Reimbursement Agreement. The Reimbursement Agreement shall have
-----------------------
been duly authorized and executed by the parties thereto in form and substance
satisfactory to the Administrative Agent and the Issuing Bank, shall be in full
force and effect and no default shall exist thereunder, and the Borrowers shall
have delivered original counterparts thereof to the Administrative Agent. Each
of the conditions precedent to the issuance of the Special Purpose Letter of
Credit as set forth in Article 5 of the Reimbursement Agreement shall have been
satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BORROWERS
-------------------------------------------
SECTION 5.1 Representations and Warranties. To induce the Administrative
------------------------------
Agent and the Lenders to enter into this Agreement and to induce the Lenders to
make the Loans, the Borrowers hereby jointly and severally represent and warrant
to the Administrative Agent and the Lenders that:
(a) Organization; Power; Qualification. Each of Maxim and its Subsidiaries
----------------------------------
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, has the power and authority to
own its properties and to carry on its business as now being conducted and is
duly qualified and authorized to do business in each jurisdiction where its
business requires such qualification and authorization. The jurisdictions in
which Maxim and its Subsidiaries are organized and qualified to do business are
described on Schedule 5.1(a). First Quality of North Carolina, Inc., a Georgia
---------------
corporation ("First Quality -NC") was dissolved and liquidated on June 26, 1997.
Pursuant to such dissolution and liquidation all of the assets of First Quality
- NC were distributed to Maxim.
(b) Ownership. Each Subsidiary of Maxim is listed on Schedule 5.1(b). The
--------- ---------------
capitalization of Maxim and each of its Subsidiaries consists of the number of
shares, authorized, issued and outstanding, of such classes and series, with or
without par value, described on Schedule 5.1(b). All outstanding shares have
---------------
been duly authorized and validly issued and are fully paid and nonassessable.
The shareholders of Maxim and each of its Subsidiaries and the number of shares
owned by each are described on Schedule 5.1 (b). There are no outstanding stock
----------------
purchase warrants, subscriptions, options, securities, instruments or other
rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of capital
stock of any Subsidiaries of Maxim, except as described on Schedule 5.1(b).
---------------
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(c) Authorization of Agreement, Loan Documents and Borrowing. Each of
--------------------------------------------------------
Maxim and its Subsidiaries has the right, power and authority and has taken all
necessary corporate and other action to authorize the execution, delivery and
performance of this Agreement and each of the other Loan Documents to which it
is a party in accordance with their respective terms. This Agreement and each
of the other Loan Documents have been duly executed and delivered by the duly
authorized officers of Maxim and each of its Subsidiaries party thereto and each
such document constitutes the legal, valid and binding obligation of Maxim or
its Subsidiary party thereto, enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors' rights in general and the
availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc.
--------------------------------------------------------------------
The execution, delivery and performance by Maxim and each of its Subsidiaries of
the Loan Documents to which each such Person is a party in accordance with their
respective terms, the borrowings hereunder and the transactions contemplated
hereby do not and will not, by the passage of time, the giving of notice or
otherwise, (i) except as set forth on Schedule 5.1(d) hereto, require any
---------------
Governmental Approval or violate any Applicable Law relating to Maxim or any of
its Subsidiaries, (ii) conflict with, result in a breach of or constitute a
default under the articles of incorporation, bylaws or other organizational
documents of Maxim or any of its Subsidiaries or any Material Contract to which
such Person is a party or by which any of its properties may be bound or any
Governmental Approval relating to such Person or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any material property
now owned or hereafter acquired by such Person other than Liens arising under
the Loan Documents.
(e) Compliance with Law; Governmental Approvals. Each of Maxim and its
-------------------------------------------
Subsidiaries (i) has all Governmental Approvals required by any Applicable Law
for it to conduct its business and (ii) is in compliance with each Governmental
Approval applicable to it and in compliance with all other Applicable Laws
relating to it or any of its respective properties. Each such Governmental
Approval is in full force and effect, is final and not subject to review on
appeal and is not the subject of any pending or, to the best knowledge of the
Borrowers, threatened attack by direct or collateral proceeding.
(f) Tax Returns and Payments. Each of Maxim and its Subsidiaries has duly
------------------------
filed or caused to be filed all federal, state, local and other tax returns
required by Applicable Law to be filed, and has paid, or made adequate provision
for the payment of, all federal, state, local and other taxes, assessments and
governmental charges or levies upon it and its property, income, profits and
assets which are due and payable, except where the payment of such tax is being
disputed in good faith and adequate reserves have been established in accordance
with GAAP. No Governmental Authority has asserted any Lien or other claim
against Maxim or any Subsidiary thereof with respect to material unpaid taxes
which has not been discharged or resolved or is not being contested in good
faith. The charges, accruals and reserves on the books of Maxim and any of its
Subsidiaries in respect of federal, state, local and other taxes for all
-48-
Fiscal Years and portions thereof are in the judgment of the Borrowers adequate,
and the Borrowers do not anticipate any additional material taxes or assessments
for any of such years.
(g) Environmental Matters. The properties of Maxim and its Subsidiaries
---------------------
are in compliance in all material respects with all applicable Environmental
Laws. There is no contamination at, under or about such properties or such
operations which could interfere in any material respect with the continued
operation of such properties or, except as set forth on Schedule 5.1(g), impair
---------------
in any material respect the fair saleable value thereof. Neither Maxim nor any
of its Subsidiaries has received any written notice of material violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of its properties or the operations conducted in connection therewith, nor does
Maxim nor any of its Subsidiaries have knowledge or reason to believe that any
such notice will be received or is being threatened.
(h) ERISA.
-----
(i) Neither any Borrower nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans other
than those identified on Schedule 5.1(h);
---------------
(ii) Each Borrower and each ERISA Affiliate is in material compliance
with all applicable provisions of ERISA and all other laws applicable to any
Employee Benefit Plans and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section 401(b)
of the Code has not yet expired. Each Employee Benefit Plan that is intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and each trust related to such plan
has been determined to be exempt under Section 501(a) of the Code. Each such
Employee Benefit Plan has been operated in a manner to preserve such
qualification. No liability has been incurred by any Borrower or any ERISA
Affiliate which remains unsatisfied for any taxes or penalties with respect to
any Employee Benefit Plan or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code) , nor has
any funding waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has any Borrower or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension
Plan prior to the due dates of such contributions under Section 412 of the Code
or Section 302 of ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension
Plan;
(iv) Neither any Borrower nor any ERISA Affiliate has: (A) engaged in
a nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code; (B) incurred any liability to the PBGC which remains
outstanding other than the payment
-49-
of premiums and there are no premium payments which are due and unpaid; (C)
failed to make a required contribution or payment to a Multiemployer Plan; or
(D) failed to make a required installment or other required payment under
Section 412 of the Code;
(v) The execution and delivery by Borrowers of this Agreement and
the borrowings hereunder will not involve any prohibited transaction under ERISA
or the Code;
(vi) No Termination Event has occurred or is reasonably expected to
occur; and
(vii) No material proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of any Borrower after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) maintained or contributed to by any Borrower or any ERISA
Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(i) Margin Stock. Neither Maxim nor any Subsidiary thereof is engaged
------------
principally or as one of its significant activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in Regulations G and U of the Board of Governors of
the Federal Reserve System). No part of the proceeds of any of the Loans will
be used for purchasing or carrying margin stock or for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation G,
T, U or X of such Board of Governors.
(j) Government Regulation. Neither Maxim nor any Subsidiary thereof is an
---------------------
"investment company" or a company "controlled" by an "investment company" (as
each such term is defined or used in the Investment Company Act of 1940, as
amended) and neither Maxim nor any Subsidiary thereof is, or after giving effect
to any Loan will be, a "Holding Company" or a "Subsidiary Company" of a "Holding
Company" or an "Affiliate" of a "Holding Company" within the respective meanings
of each of the quoted terms of the Public Utility Holding Company Act of 1935 as
amended, or any other Applicable Law which materially limits its ability to
incur or consummate the transactions contemplated hereby.
(k) Patents, Copyrights and Trademarks. Each of Maxim and its
----------------------------------
Subsidiaries owns or possesses all patent, copyright and trademark rights which
are required to conduct its business without infringing upon any validly
asserted rights of others. No event has occurred which permits, or after notice
or lapse of time or both would permit, the revocation or termination of any such
rights. Except as set forth on Schedule 5.1(k), neither Maxim nor any of its
Subsidiaries has been threatened with any litigation regarding patents,
copyrights or trademarks that would present a material impediment to the
business of any such Person.
(l) Material Contracts. Schedule 5.1(1) sets forth a complete and accurate
------------------ ---------------
list of all Material Contracts of Maxim and its Subsidiaries in effect as of the
Closing Date not listed on any other Schedule hereto; other than as set forth in
Schedule 5.1(1), each of Maxim and any Subsidiary thereof party thereto has
---------------
performed all of its obligations under such Material
-50-
Contracts and, to the best knowledge of the Borrowers, each other party thereto
is in compliance with each such Material Contract, and each such Material
Contract is, and after giving effect to the consummation of the transactions
contemplated by the Loan Documents will be, in full force and effect in
accordance with the terms thereof. Maxim and its Subsidiaries have delivered to
the Administrative Agent a true and complete copy of each Material Contract
required to be listed on Schedule 5.1(1).
---------------
(m) Employee Relations. Each of Maxim and its Subsidiaries is not, except
------------------
as set forth on Schedule 5.1(m), party to any collective bargaining agreement
---------------
nor has any labor union been recognized as the representative of its employees.
Maxim knows of no pending, threatened or contemplated strikes, work stoppage or
other collective labor disputes involving its employees or those of its
Subsidiaries.
(n) Burdensome Provisions. Neither Maxim nor any Subsidiary thereof is a
---------------------
party to any indenture, agreement, lease or other instrument, or subject to any
corporate or partnership restriction, Governmental Approval or Applicable Law
which is so unusual or burdensome as in the foreseeable future could be
reasonably expected to have a Material Adverse Effect. Maxim and its
Subsidiaries do not presently anticipate that future expenditures needed to meet
the provisions of any statutes, orders, rules or regulations of a Governmental
Authority will be so burdensome as to have a Material Adverse Effect.
(o) Financial Statements. All balance sheets, statements of income,
--------------------
retained earnings, stockholders' equity and cash flows, and all other financial
information of Maxim and its Subsidiaries which have been furnished by the
Borrowers to the Administrative Agent and the Lenders for the purposes of or in
connection with this Agreement, including without limitation the financial
statements described in Section 4.2 (e) , have been prepared in accordance with
GAAP consistently applied throughout the periods involved and present fairly in
all material respects the matters reflected therein subject, in the case of
unaudited statements, to changes resulting from normal year-end audit
adjustments and items that would be disclosed in footnotes to the audited
statements. As of the Closing Date, except as set forth on Schedule 5.1(o),
---------------
neither Maxim nor any of its Subsidiaries has any contingent liability or
liability for taxes, long-term leases or unusual forward or long-term
commitments which are not reflected in the financial statements described above
or in the notes thereto.
(p) No Material Adverse Change. Since January 31, 1997, there has been no
--------------------------
material adverse change in the condition (financial or otherwise), operations,
properties, business or prospects of Maxim and its Subsidiaries, including any
event or condition that has had or is reasonably likely to have a Material
Adverse Effect.
(q) Solvency. As of the Closing Date and after giving effect to the
--------
transactions contemplated by this Agreement and the other Loan Documents,
including, without limitation, each Loan made hereunder, each of Maxim and each
of its Subsidiaries will be Solvent. The Obligations incurred by each Borrower
under this Agreement and the other Loan Documents, and the security interests
granted under the Security Documents, were incurred and granted in exchange for
fair equivalent value. All trade and other accounts payable of each Borrower
are
-51-
current and are being paid substantially in accordance with their respective
terms and the consummation of the transactions contemplated by this Agreement
and the other Loan Documents will not impair the ability of any Borrower to pay
its respective trade and other accounts payable in accordance with their terms.
No Borrower contemplates filing a petition in bankruptcy or for reorganization
under the Bankruptcy Code, nor does any Borrower have any knowledge of any
threatened bankruptcy or insolvency proceedings against it or any other
Borrower.
(r) Titles to Properties. Each of Maxim and its Subsidiaries has such
--------------------
title to the real property owned or leased by it as is necessary or desirable to
the conduct of its business and good and marketable title to all of its personal
property sufficient to carry on its business as presently conducted, except such
property as has been disposed of by Maxim or its Subsidiaries subsequent to such
date which dispositions have been in the ordinary course of business or as
otherwise expressly permitted hereunder. Schedule 5.1(r) hereto sets forth the
---------------
address of all real property owned or leased by a Borrower (and if leased, the
landlord thereof) and the location of the chief executive office of each
Borrower.
(s) Liens. None of the properties and assets of Maxim or any Subsidiary
-----
thereof is subject to any Lien, except in each case Permitted Liens. No
financing statement under the Uniform Commercial Code of any state which names
Maxim or any Subsidiary thereof or any of their respective trade names or
divisions as debtor and which has not been terminated, has been filed in any
state or other jurisdiction and neither Maxim nor any Subsidiary thereof has
signed any such financing statement or any security agreement authorizing any
secured party thereunder to file any such financing statement (other than
financing statements required to be terminated by Maxim within thirty days after
the Closing Date pursuant to the provisions of the Letter Agreement), except to
perfect Permitted Liens.
(t) Debt and Contingent Obligations. Schedule 5.1(t) is a complete and
------------------------------- ---------------
correct listing of all Debt and Contingent Obligations of Maxim and its
Subsidiaries. Each of Maxim and its Subsidiaries have performed and are in
material compliance with all of the terms of such Debt and Contingent
Obligations and all instruments and agreements relating thereto, and no default
or event of default, or event or condition which with notice or lapse of time or
both would constitute such a default or event of default on the part of Maxim or
its Subsidiaries exists with respect to any such Debt or Contingent Obligation.
(u) Litigation. Except as set forth on Schedule 5.1(u), there are no
---------- ---------------
actions, suits or proceedings pending nor, to the knowledge of the Borrowers,
threatened against or in any other way relating adversely to or affecting Maxim
or any Subsidiary thereof or any of their respective properties in any court or
before any arbitrator of any kind or before or by any Governmental Authority
which, if adversely determined, is reasonably likely to have a Material Adverse
Effect.
(v) Franchise and License Fees. Maxim and each of its Subsidiaries have
--------------------------
paid all franchise, license or other fees and charges which have become due
pursuant to any Governmental Approval in respect of its business and has made
appropriate provision as is required by GAAP for any such fees and charges which
have accrued.
-52-
(w) Absence of Defaults. No event has occurred or is continuing which
-------------------
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a default
or event of default by Maxim or any Subsidiary thereof under any Material
Contract or judgment, decree or order to which Maxim or its Subsidiaries is a
party or by which Maxim or its Subsidiaries or any of their respective
properties may be bound or which would require Maxim or its Subsidiaries to make
any payment thereunder prior to the scheduled maturity date therefor.
(x) Accuracy and Completeness of Information. All written information,
----------------------------------------
reports and other papers and data produced by or on behalf of Maxim or any
Subsidiary thereof and furnished to the Lenders were, at the time the same were
so furnished, complete and correct in all material respects. No document
furnished or written statement made to the Agents or the Lenders by Maxim or any
Subsidiary thereof in connection with the negotiation, preparation or execution
of this Agreement or any of the Loan Documents contains or will contain any
untrue statement of a fact material to the creditworthiness of Maxim or its
Subsidiaries or omits or will omit to state a material fact necessary in order
to make the statements contained therein not misleading. Maxim is not aware of
any facts which it has not disclosed in writing to the Administrative Agent
having a Material Adverse Effect, or insofar as Maxim can now foresee, could
reasonably be expected to have a Material Adverse Effect.
SECTION 5.2 Survival of Representations and Warranties, Etc. All
-----------------------------------------------
representations and warranties set forth in this Article V and all
representations and warranties contained in any certificate or in any of the
Loan Documents (including without limitation, any such representation or
warranty made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Closing Date, shall survive the Closing Date and shall not be
waived by the execution and delivery of this Agreement, any investigation made
by or on behalf of the Lenders or any borrowing hereunder.
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES
---------------------------------
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.10 hereof, the Borrowers will
furnish or cause to be furnished to the Administrative Agent and each Lender at
their respective addresses set forth in Section 12.1 hereof, or such other
address as may be designated by such Administrative Agent or Lenders from time
to time:
SECTION 6.1 Financial Statements and Projections.
------------------------------------
(a) Quarterly Financial Statements. As soon as practicable and in any
------------------------------
event within forty-five (45) days after the end of each fiscal quarter, an
unaudited Consolidated and
-53-
consolidating balance sheet of Maxim and its Subsidiaries as of the close of
such fiscal quarter and unaudited Consolidated and consolidating statements of
income, retained earnings and cash flows for the fiscal quarter then ended and
that portion of the Fiscal Year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year for the portion of the Fiscal Year then ended and
prepared by Maxim in accordance with GAAP, and certified by the chief financial
officer of Maxim to present fairly in all material respects the financial
condition of Maxim and its Subsidiaries as of their respective dates and the
results of operations of Maxim and its Subsidiaries for the respective periods
then ended.
(b) Annual Financial Statements. As soon as practicable and in any event
---------------------------
within ninety (90) days after the end of each Fiscal Year, an unaudited
consolidating balance sheet of Maxim and its Subsidiaries and an audited
Consolidated balance sheet of Maxim and its Subsidiaries as of the close of such
Fiscal Year and audited Consolidated statements of income, retained earnings and
cash flows for the Fiscal Year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by an independent certified public
accounting firm of nationally recognized standing in accordance with GAAP, and
accompanied by a report thereon by such certified public accountants that is not
qualified with respect to scope limitations imposed by Maxim or any of its
Subsidiaries or with respect to accounting principles followed by Maxim or any
of its Subsidiaries not in accordance with GAAP.
(c) Annual Business Plan and Financial Projections. As soon as practicable
----------------------------------------------
and in any event within thirty (30) days prior to the beginning of each Fiscal
Year, a business plan of Maxim and its Subsidiaries for the ensuing four fiscal
quarters, such plan to include, on a quarterly basis, the following, prepared in
GAAP format: a quarterly operating and capital budget, a projected income
statement, statement of cash flows and balance sheet and a report containing
management's discussion and analysis of such projections (such business plan and
projections, the "Projections"), accompanied by a certificate from the chief
financial officer of Maxim to the effect that, to the best of such officer's
knowledge, the Projections are good faith estimates of the financial condition
and operations of Maxim and its Subsidiaries for such four quarter period.
SECTION 6.2 Officer's Compliance Certificate. At each time financial
--------------------------------
statements are delivered pursuant to Sections 6.1(a) or (b), a certificate of
the chief financial officer of Maxim in the form of Exhibit D attached hereto
---------
(an "Officer's Compliance Certificate"):
(a) stating that such officers have reviewed such financial statements and
such statements fairly present the financial condition of Maxim and its
Subsidiaries as of the dates indicated and the results of their operations and
cash flows for the periods indicated;
(b) stating that to such officer's knowledge, based on a reasonable
examination, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default and its nature, when it occurred,
whether it is continuing and the steps being taken by the Borrowers with respect
to such Default or Event of Default; and
-54-
(c) setting forth as at the end of such fiscal quarter or Fiscal Year, as
the case may be, the calculations required to establish whether or not Maxim and
its Subsidiaries were in compliance with the financial covenants set forth in
Article VIII hereof as at the end of each respective period and the calculation
of the Applicable Margin pursuant to Section 3.1(c) as at the end of each
respective period.
SECTION 6.3 Accountants' Certificate. At each time financial statements
------------------------
are delivered pursuant to Section 6.1(b) , a certificate of the independent
public accountants certifying such financial statements addressed to the
Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the certification
of such financial statements, they obtained no knowledge of any Default or Event
of Default or, if such is not the case, specifying such Default or Event of
Default and its nature and period of existence; and
(b) including the calculations prepared by such accountants required to
establish whether or not Maxim and its Subsidiaries are in compliance with the
financial covenants set forth in Article VIII hereof as at the end of each
respective period.
SECTION 6.4 Borrowing Base Certificate. Not later than 45 days after
--------------------------
the end of each fiscal quarter, a Borrowing Base Certificate substantially in
the form of Exhibit L and executed by the chief financial officer of Maxim,
---------
setting forth the Borrowers' computation of the Borrowing Base as of the just
ended fiscal quarter.
SECTION 6.5 Other Reports.
-------------
(a) Promptly upon receipt thereof, copies of any management report and any
management responses thereto submitted to any Borrower or its Board of Directors
by its independent public accountants in connection with their auditing
function;
(b) Such other information regarding the operations, business affairs and
financial condition of Maxim or any of its Subsidiaries as the Administrative
Agent or the Required Lenders may request; and
(c) All filings and communications by, or in connection with and received
by, Maxim, with or from the SEC (other than filings made by individuals and not
involving a Change in Control on Forms 3 or 4 pursuant to Section 16 of the
Exchange Act) and all notices and proxy and other information provided by Maxim
to its shareholders.
SECTION 6.6 Notice of Litigation and Other Matters. Prompt (but in no
--------------------------------------
event later than three (3) days after an officer of any Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all material proceedings and investigations by or
before any Governmental Authority and all material actions and proceedings in
any court or before any
-55-
arbitrator against or involving Maxim or any Subsidiary thereof or any of their
respective properties, assets or businesses;
(b) any notice of any material violation received by Maxim or any
Subsidiary thereof from any Governmental Authority, including without
limitation, any notice of a material violation of Environmental Laws;
(c) any labor controversy that has resulted in, or could reasonably be
expected to result in, a strike or other work action against Maxim or any
Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order exceeding the Material
Judgment Amount that may be assessed against or threatened against Maxim or any
of its Subsidiaries;
(e) any Default or Event of Default, or any event which constitutes or
which with the passage of time or giving of notice or both would constitute a
default or event of default under any Material Contract to which Maxim or any of
its Subsidiaries is a party or by which Maxim or any Subsidiary thereof or any
of their respective properties may be bound;
(f) (i) the failure of any Borrower or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section 412 of the
Code by the due date, (ii) any Termination Event or "prohibited transaction," as
such term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Employee Benefit Plan or any trust created thereunder, along
with a description of the nature thereof, what action such Borrower has taken,
is taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto, (iii) all notices received by any Borrower or any
ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan, (iv) all notices received by
any Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning
the imposition or amount of withdrawal liability pursuant to Section 4202 of
ERISA, (v) any Borrower obtaining knowledge or reason to know that Maxim or any
ERISA Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section 4041(c)
of ERISA, and (vi) the requirement to file any notice with the Internal Revenue
Service, Department of Labor, PBGC or any plan participant, beneficiary or
alternate payee required under Sections 101(d), 302(f)(4), 303 and 307 of ERISA
or under Section 401(a)(29) of the Code with respect to any Employee Benefit
Plan of any Borrower or any ERISA Affiliate; or
(g) any event which makes any of the representations set forth in Section
5.1 inaccurate in any material respect.
SECTION 6.7 Accuracy of Information. All written information, reports,
-----------------------
statements and other papers and data furnished by or on behalf of any Borrower
to any Agent or Lender whether pursuant to this Article VI or any other
provision of this Agreement, or any of the Security Documents, shall be, at the
time the same is so furnished, complete and correct in all material respects
based on the applicable Borrower's knowledge thereof.
-56-
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 12.10, Maxim and each Borrower
will, and will cause each of its Subsidiaries to:
SECTION 7.1 Preservation of Corporate Existence and Related Matters.
-------------------------------------------------------
Except as permitted by Section 9.5, preserve and maintain its separate corporate
existence and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction where its
business requires such qualification and authorization, if failure to qualify or
to remain so qualified would have or could reasonably be expected to have a
Material Adverse Effect with respect to Maxim or any of its Subsidiaries.
SECTION 7.2 Maintenance of Property. Protect and preserve all properties
-----------------------
useful in and material to its business, including material copyrights, patents,
trade names and trademarks; maintain in good working order and condition
(reasonable wear and tear excepted) all buildings, equipment and other tangible
real and personal property; and from time to time make or cause to be made all
renewals, replacements and additions to such property necessary in the
reasonable judgement of such Borrower for the conduct of its business, so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 7.3 Insurance. In addition to the requirements set forth in the
---------
Security Documents, maintain insurance with financially sound and reputable
insurance companies against such risks and in such amounts as are customarily
maintained by similar businesses and as may be required by Applicable Law, and
on the Closing Date and from time to time thereafter deliver to the
Administrative Agent upon its request a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
SECTION 7.4 Accounting Methods and Financial Records. Maintain a system
----------------------------------------
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be necessary
to permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 7.5 Payment and Performance of Obligations. Pay and perform all
--------------------------------------
Obligations under this Agreement and the other Loan Documents and pay or perform
(a) all taxes, assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (b) all other indebtedness,
obligations and liabilities in accordance with customary trade practices;
provided, that such Borrower and its Subsidiaries may contest any item described
--------
in clauses (a) and
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(b) hereof in good faith so long as adequate reserves are maintained with
respect thereto in accordance with GAAP.
SECTION 7.6 Compliance With Laws and Approvals. Observe and remain in
----------------------------------
material compliance with all Applicable Laws and maintain in full force and
effect all material Governmental Approvals, in each case applicable or necessary
to the conduct of its business.
SECTION 7.7 Environmental Laws. In addition to and without limiting the
------------------
generality of Section 7.6, (a) comply in all material respects with, and use its
best efforts to ensure such compliance by all of its tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and comply with and
maintain, and use its best efforts to ensure that all of its tenants and
subtenants obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws; (b) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws, and timely comply with all lawful orders and directives of
any Governmental Authority regarding Environmental Laws; and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations of such Borrower or its Subsidiaries, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney's and consultant's fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of or relate
to the gross negligence or willful misconduct of the party seeking
indemnification therefor.
SECTION 7.8 Compliance with ERISA and the Code. In addition to and
----------------------------------
without limiting the generality of Section 7.6, make timely payment of
contributions required to meet the minimum funding standards set forth in ERISA
or the Code with respect to any Employee Benefit Plan; not take any action or
fail to take action the result of which could be a liability to the PBGC or to a
Multiemployer Plan; not participate in any prohibited transaction that could
result in any civil penalty under ERISA or tax under the Code; furnish to the
Administrative Agent upon the Administrative Agent's request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Administrative Agent; and operate each Employee Benefit Plan in such a
manner that such plan will not incur any tax liability under Section 4980B of
the Code or any liability to any qualified beneficiary as defined in Section
4980B of the Code.
SECTION 7.9 Compliance With Agreements. Comply in all material respects
--------------------------
with each term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business if noncompliance would
have or could reasonably be expected to have a Material Adverse Effect with
respect to Maxim or any of its Subsidiaries, including, without limitation, any
Material Contract; provided, that such Borrower or Subsidiary may contest any
--------
such lease, agreement or other instrument in good faith so long as adequate
reserves are maintained in accordance with GAAP.
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SECTION 7.10 Conduct of Business. Engage only in businesses in
-------------------
substantially the same fields as the businesses conducted on the Closing Date
and in lines of business reasonably related thereto.
SECTION 7.11 Visits and Inspections. Upon reasonable notice therefrom
----------------------
and during normal business hours, permit representatives of any of the
Administrative Agent or Lenders, from time to time, to visit and inspect its
properties; inspect, audit and make extracts from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results of
operations and business prospects.
SECTION 7.12 Subsidiaries. Upon the creation of any Subsidiary permitted
------------
by this Agreement, cause to be executed and delivered to the Administrative
Agent: (a) a Joinder Agreement and the documents referred to therein, (b) the
supplement substantially in the form attached to the Security Agreement, (c) the
supplement substantially in the form attached to the applicable Pledge
Agreement, or if the owner of such Subsidiary is not Maxim, GCO, Inc., Maxim
Retail Group, Inc. or Kinnaird & ▇▇▇▇▇▇▇ Interiors, Inc., a pledge agreement
substantially in the form of the Pledge Agreements executed by such owner with
such modifications thereto as requested by the Administrative Agent, (d) such
other documents reasonably requested by the Administrative Agent consistent with
the terms of this Agreement which provide that such Subsidiary shall become a
Borrower hereunder bound by all of the terms, covenants and agreements contained
in the Loan Documents and that the assets of such Subsidiary shall become
Collateral for the Obligations and (e) such other documents as the
Administrative Agent shall reasonably request, including without limitation,
officers' certificates, financial statements, opinions of counsel, board
resolutions, charter documents, certificates of existence and authority to do
business and any other closing certificates and documents described in Section
4.2.
SECTION 7.13 Further Assurances. Make, execute and deliver all such
------------------
additional and further acts, things, deeds and instruments as any Agent or
Lender may reasonably require to document and consummate the transactions
contemplated hereby and to vest completely in and insure each Agent and the
Lenders their respective rights under this Agreement, the Notes and the other
Loan Documents.
ARTICLE VII
FINANCIAL COVENANTS
-------------------
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.10 hereof, Maxim and its
Subsidiaries on a Consolidated basis will not:
SECTION 8.1 Total Debt to Total Capitalization. As of any fiscal quarter
----------------------------------
end, permit the ratio of (a) Total Debt of Maxim and its Subsidiaries as of such
date to (b) the sum of (i)
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Consolidated Net Worth of Maxim and its Subsidiaries plus (ii) Total Debt of
----
Maxim and its Subsidiaries, each as of such date, to exceed a ratio of .55 to
1.0.
SECTION 8.2 Total Debt to EBITDAR. As of any fiscal quarter end, permit
----------------------
the ratio of (a) Total Debt of Maxim and its Subsidiaries as of such date to (b)
Consolidated EBITDAR of Maxim and its Subsidiaries for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date to
exceed a ratio of 4.5 to 1.00.
SECTION 8.3 Senior Debt to EBITDAR. As of any fiscal quarter end, permit
----------------------
the ratio of (a) Consolidated Senior Debt of Maxim and its Subsidiaries as of
such date to (b) Consolidated EBITDAR of Maxim and its Subsidiaries for the
period of four (4) consecutive fiscal quarters ending on or immediately prior to
such date to exceed the ratio of 4.00 to 1.00 on or before January 31, 1998, and
a ratio of 3.75 to 1.00 thereafter.
SECTION 8.4 Interest Coverage Ratio. As of any fiscal quarter end,
-----------------------
permit the ratio of (a) Consolidated EBITDAR of Maxim and its Subsidiaries for
the period of four (4) consecutive fiscal quarters ending on or immediately
prior to such date, to (b) (i) Interest Expense plus (ii) retail store rental-
related expense for such period, to be less than a ratio of 2.00 to 1.00.
ARTICLE IX
NEGATIVE COVENANTS
------------------
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.10 hereof, Maxim will not and
will not permit any of its Subsidiaries to:
SECTION 9.1 Limitations on Debt. Create, incur, assume or suffer to
-------------------
exist any Debt except (a) the Obligations, (b) Debt incurred in connection with
a Hedging Agreement with a counterparty and upon terms and conditions reasonably
satisfactory to the Administrative Agent, (c) existing Debt set forth on
Schedule 9.1, (d) Debt consisting of Contingent Obligations permitted by Section
------------
9.2, (e) Debt of any Borrower to any other Borrower, but only if such Debt is
subordinated to the Obligations pursuant to the terms and conditions of the
Intercompany Subordination Agreement, (f) Debt constituting trade payables and
accruals arising in the ordinary course of business of Maxim and its
Subsidiaries, (g) Debt for which any Person acquired by Maxim in a transaction
permitted by Section 9.4(g) is obligated, but only if such Debt has as its sole
obligors (excluding guarantor obligors) such acquired Person and/or Maxim, (h)
purchase money Debt incurred in connection with a purchase or acquisition
permitted by Section 9.4(g), (i) purchase money Debt secured only by an interest
in the property being acquired, but only if the amount of such purchase money
Debt, when aggregated with all other purchase money Debt incurred by Maxim or
any of its Subsidiaries pursuant to subsections 9.1(h) and 9.1(i) during the
term of this Agreement, does not exceed $1,000,000, and (j) Subordinated Debt,
provided that the terms of such Subordinated Debt are in form and substance
satisfactory to the Lenders and no Default or Event of Default shall have
occurred before and after giving effect to the incurring of such Subordinated
Debt.
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SECTION 9.2 Limitations on Contingent Obligations. Create, incur, assume
-------------------------------------
or suffer to exist any Contingent Obligations except (i) Contingent Obligations
in favor of the Administrative Agent for the benefit of the Administrative Agent
and the Lenders, (ii) Contingent Obligations incurred or assumed in connection
with transactions permitted by Section 9.4(g), and (iii) Contingent Obligations
in respect of Subordinated Debt permitted to be incurred by Section 9.1(j),
provided that such Contingent Obligations are subordinated to the Credit
Facilities upon terms and conditions satisfactory to the Lenders.
SECTION 9.3 Limitations on Liens. Create, incur, assume or suffer to
--------------------
exist, any Lien on or with respect to any of its assets or properties (including
shares of capital stock), real or personal, whether now owned or hereafter
acquired, except Permitted Liens.
SECTION 9.4 Limitations on Loans, Advances, Investments and Acquisitions.
------------------------------------------------------------
Purchase, own, invest in or otherwise acquire, directly or indirectly, any
capital stock, interests in any partnership or joint venture, evidence of
indebtedness or other obligation or security, substantially all or a material
portion of the business or assets of any other Person or any other investment or
interest whatsoever in any other Person; or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person; or enter into, directly or
indirectly, any commitment or option in respect of the foregoing except:
(a) capital contributions to and investments in Wholly-Owned Subsidiaries
existing on the Closing Date and the other existing loans, advances and
investments described on Schedule 9.4;
-------------
(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than 120 days from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., (iii) certificates of
deposit maturing no more than 120 days from the date of creation thereof issued
by commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$500,000,000 and having a rating of "A" or better by a nationally recognized
rating agency; provided, that the aggregate amount invested in such certificates
--------
of deposit shall not at any time exceed $5,000,000 for any one such certificate
of deposit and $10,000,000 for any one such bank, or (iv) time deposits maturing
no more than 30 days from the date of creation thereof with commercial banks or
savings banks or savings and loan associations each having membership either in
the Federal Deposit Insurance Corporation ("FDIC") or the deposits of which are
insured by the FDIC and in amounts not exceeding the maximum amounts of
insurance thereunder;
(c) capital contributions to and investments in Wholly-Owned Subsidiaries
created or acquired after the Closing Date; provided, that such Wholly-Owned
--------
Subsidiaries become Borrowers hereunder pursuant to the requirements of Section
7.12 hereof;
(d) loans and advances to employees for reasonable and necessary business
and travel expenses in the ordinary course of business of Maxim and its
Subsidiaries;
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(e) deposits for utilities, security deposits, leases and similar prepaid
expenses incurred in the ordinary course of business;
(f) trade accounts created in the ordinary course of business;
(g) investments by Maxim or any Subsidiary in the form of acquisitions of
all or substantially all of the business or a line of business (whether by the
acquisition of capital stock, assets or any combination thereof) of any other
Person so long as (i) the acquisition is of a company, business or property in
the same line of business as Maxim or any Subsidiary of Maxim, (ii) no Default
or Event of Default is in existence at the time of such acquisition or would be
created as a consequence of such acquisition, (iii) on a pro forma combined
--- -----
basis, assuming that the Person that is the target of the acquisition had been
acquired as of the first day of the four quarter fiscal period ending at the
immediately preceding fiscal quarter end, all financial covenants and other
terms and provisions of this Agreement would have been complied with during the
four fiscal quarters ending at the immediately preceding fiscal quarter end,
after giving pro forma effect to the acquisition, including, without limitation,
--- -----
any Debt incurred or assumed by Maxim as a result of such acquisition, (iv) the
cash consideration paid in any single acquisition does not exceed ten million
dollars ($10,000,000) and in the aggregate the cash consideration paid for all
such acquisitions in any Fiscal Year does not exceed twenty million dollars
($20,000,000), and (v) the total cash and non-cash consideration paid in any
single acquisition does not exceed twenty million dollars ($20,000,000) and in
the aggregate the total cash and non-cash consideration paid for all such
acquisitions in any Fiscal Year does not exceed forty million dollars
($40,000,000);
(h) investments by Maxim or any Subsidiary in the form of acquisitions of
all or substantially all of the business or a line of business (whether by the
acquisition of capital stock, assets or any combination thereof) of any other
Person if approved by the Required Lenders, in their sole and absolute
discretion, in writing prior to such consummation;
(i) investments by Maxim or any Subsidiary in the form of purchase money
loans or other extensions of credit by Maxim or any Subsidiary to any Person
obligated to Maxim or any Subsidiary in connection with an acquisition or
disposition of assets or property otherwise permitted under this Agreement so
long as (after giving effect to such proposed loan or other extension of credit)
the aggregate amount of all such purchase money loans or other extensions of
credit by Maxim or any Subsidiary on or after the Closing Date does not at any
time exceed two million five hundred thousand dollars ($2,500,000); and
(j) such other investments consisting of loans by Maxim or any Subsidiary
to their respective franchisees so long as (after giving effect to such proposed
loan) (i) the amount of any single such loan by Maxim or any Subsidiary on or
after the Closing Date does not at any time exceed two million dollars
($2,000,000), and (ii) the aggregate amount of all such loans by Maxim or any
Subsidiary on or after the Closing Date does not at any time exceed six million
dollars ($6,000,000).
SECTION 9.5 Limitations on Mergers and Liquidation. Merge, consolidate
--------------------------------------
or enter into any similar combination with any other Person or liquidate, wind-
up or dissolve itself (or suffer any
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liquidation or dissolution) except (a) any Wholly-Owned Subsidiary of Maxim may
merge with Maxim or any other Wholly-Owned Subsidiary of Maxim and (b) Maxim or
any Wholly-Owned Subsidiary may merge with or into any other Person for the
purpose of consummating any acquisition permitted by Section 9.4 as long as,
either (i) Maxim or such Wholly-Owned Subsidiary is the surviving entity, or
(ii) in the case of the merger of a Wholly-Owned Subsidiary, such other Person
is the surviving entity and Maxim or another Wholly-Owned Subsidiary owns all of
the capital stock or equity interests of such other Person following the
consummation of such acquisition, and in either case no Default or Event of
Default shall have occurred before and after giving effect to such merger.
SECTION 9.6 Limitations on Sale of Assets. Convey, sell, lease, assign,
-----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the business of
Maxim or any of its Subsidiaries;
(c) the sale or discount without recourse of accounts receivable arising in
the ordinary course of business in connection with the compromise or collection
thereof;
(d) the transfer by any Subsidiary of any of its property to any Borrower,
or the transfer by Maxim of any of its intellectual property to any Borrower;
(e) the sale of assets with an aggregate value not to exceed $2,500,000 in
any year in connection with the closing and liquidation by Maxim or its
Subsidiaries of retail stores, or
(f) the Pending Asset Sale.
SECTION 9.7 Transactions with Affiliates. Directly or indirectly: (a)
----------------------------
make any loan or advance to, or purchase or assume any note or other obligation
to or from, any of its officers, directors, shareholders or other Affiliates, or
to or from any member of the immediate family of any of its officers, directors,
shareholders or other Affiliates, or subcontract any operations to any of its
Affiliates, or (b) enter into, or be a party to, any transaction with any of its
Affiliates, except pursuant to the reasonable requirements of its business and
upon fair and reasonable terms that are fully disclosed to the Required Lenders
and are no less favorable to it than it would obtain in a comparable arm's
length transaction with a Person not its Affiliate.
SECTION 9.8 Certain Accounting Changes. Change its Fiscal Year end, or
--------------------------
make any material change in its accounting treatment and reporting practices
except as required by GAAP.
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SECTION 9.9 Licenses. Terminate any Governmental Approval or any
--------
Material Contract without the prior written consent of the Required Lenders if
in the reasonable opinion of the Required Lenders such termination would have a
Material Adverse Effect.
SECTION 9.10 Restrictive Agreements. Enter into (a) any agreement
----------------------
providing for Debt of Maxim or its Subsidiaries which contains any negative
pledge (other than any negative pledge granted in connection with the incurring
of Subordinated Debt permitted by Section 9.1(j), provided that the form and
substance of such negative pledge is satisfactory to the Lenders) on assets or
any covenants materially more restrictive than the provisions of Articles VII,
VIII and IX hereof, or which restricts, limits or otherwise encumbers its
ability to incur Liens on or with respect to any of its assets or properties
other than the assets or properties securing such Debt or (b) any agreement
which shall restrict, limit or otherwise encumber (by covenant or otherwise) the
ability to make any payment to Maxim or any of its Subsidiaries, in the form of
dividends, intercompany advances or otherwise.
SECTION 9.11 Rebate Escrow Account. Permit any funds of Maxim or any of
---------------------
its Subsidiaries to be deposited in the Rebate Escrow Account, other than funds
received which reflect rebate payments reserved for franchisees of Maxim.
ARTICLE X
DEFAULT AND REMEDIES
--------------------
SECTION 10.1 Events of Default. Each of the following shall
-----------------
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans. Any Borrower shall
----------------------------------------
default in any payment of principal of any Loan or Note when and as due (whether
at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Any Borrower shall default in the payment
---------------------
when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan or Note or the payment of any other Obligation.
(c) Misrepresentation. Any representation or warranty made or deemed
-----------------
to be made by any Borrower or any of its Subsidiaries under this Agreement, any
Loan Document or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect when made or deemed
made, except to the extent that (i) an event or condition has occurred that
would cause a representation or warranty to be incorrect or misleading, (ii) the
occurrence of such event or condition and the representation or warranty to
which it relates has been promptly disclosed in writing to the Administrative
Agent and the Lenders after the occurrence of such event or condition and (iii)
the occurrence of such event or condition did not and will not have,
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and is not reasonably expected to have, a Material Adverse Effect with respect
to Maxim or any of its Subsidiaries.
(d) Default in Performance of Certain Covenants. Any Borrower shall
-------------------------------------------
default in the performance or observance of any covenant or agreement contained
in Sections 2.9, 6.1, 6.4, 6.6(e), 7.1, 7.12 or 7.13 or Articles VIII or IX of
this Agreement.
(e) Default in Performance of Other Covenants and Conditions. Any
--------------------------------------------------------
Borrower or Subsidiary thereof shall default in the performance or observance of
any term, covenant, condition or agreement contained in this Agreement (other
than as specifically provided for otherwise in this Section 10.1) or any other
Loan Document and such default shall continue for a period of thirty (30) days
after written notice thereof has been given to such Borrower or Subsidiary by
the Administrative Agent.
(f) Hedging Agreement. Any termination payment in an amount in excess
-----------------
of $250,000 shall be due by a Borrower under any Hedging Agreement and such
amount is not paid within five (5) Business Days of the due date thereof.
(g) Debt Cross-Default. Maxim or any of its Subsidiaries shall (i)
------------------
default in the payment of any Debt in an amount exceeding $1,000,000 beyond the
period of grace, if any, provided in the instrument or agreement under which
such Debt was created; or (ii) default in the observance or performance of any
other agreement or condition relating to any Debt or contained in any instrument
or agreement evidencing, securing or relating thereto or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).
(h) Other Cross-Defaults. Maxim or any of its Subsidiaries shall
--------------------
default in the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract the breach of which could
reasonably be expected to have a Material Adverse Effect unless, but only as
long as, the existence of any such default is being contested by Maxim or such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect thereof have been established on the books of Maxim or such Subsidiary
to the extent required by GAAP.
(i) Change in Control. A Change in Control shall occur.
-----------------
(j) Voluntary Bankruptcy Proceeding. Maxim or any Subsidiary thereof
-------------------------------
shall (i) commence a voluntary case under the federal bankruptcy laws (as now or
hereafter in effect); (ii) file a petition seeking to take advantage of any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts; (iii) consent
to or fail to contest within sixty (60) days of the filing thereof any petition
filed against it in an involuntary case under such bankruptcy laws or other
laws; (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property; (v) admit
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in writing its inability to pay its debts as they become due; (vi) make a
general assignment for the benefit of creditors; or (vii) take any corporate
action for the purpose of authorizing any of the foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding
---------------------------------
shall be commenced against Maxim or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for Maxim or any Subsidiary thereof or for all or any substantial part
of their respective assets, and such case or proceeding shall continue
undismissed or unstayed for a period of sixty (60) consecutive calendar days, or
an order granting the relief requested in such case or proceeding (including,
but not limited to, an order for relief under such federal bankruptcy laws)
shall be entered.
(l) Failure of Agreements. Any material provision of any other Loan
---------------------
Document shall for any reason cease to be valid and binding on any Borrower or
Subsidiary thereof party thereto or any such Person shall so state in writing or
the Loan Documents shall for any reason cease to create a valid and perfected
first priority Lien on, or security interest in, any of the Collateral purported
to be covered thereby, in each case other than in accordance with the express
terms hereof or thereof.
(m) Termination Event. The occurrence of any of the following events:
-----------------
(i) any Borrower or any ERISA Affiliate fails to make full payment when due of
all amounts which, under the provisions of any Pension Plan or Section 412 of
the Code, such Borrower or ERISA Affiliate is required to pay as contributions
thereto; (ii) an accumulated funding deficiency in excess of $250,000 occurs or
exists, whether or not waived, with respect to any Pension Plan; (iii) a
Termination Event; or (iv) any Borrower or any ERISA Affiliate as employers
under one or more Multiemployer Plan makes a complete or partial withdrawal from
any such Multiemployer Plan and the plan sponsor of such Multiemployer Plan
notifies such withdrawing employer that such employer has incurred a withdrawal
liability requiring payments in an amount exceeding $250,000.
(n) Judgment. A judgment or order for the payment of money which
--------
exceeds in amount the Material Judgment Amount shall be entered against Maxim or
any of its Subsidiaries by any court and such judgment or order shall continue
undischarged or unstayed for a period of thirty (30) days.
(o) Attachment. A warrant or writ of attachment or execution or
----------
similar process shall be issued against any property of Maxim or any Subsidiary
thereof which exceeds in value the Material Judgment Amount and such warrant or
process shall continue undischarged or unstayed for a period of thirty (30)
days.
SECTION 10.2 Remedies. Upon the occurrence of an Event of Default
--------
and at any time thereafter unless and until such Event of Default has been
waived by the Required Lenders, the Administrative Agent shall, upon the request
and direction of the Required Lenders, by notice to the Borrowers:
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(a) Acceleration: Termination of Facilities. Declare the principal of
---------------------------------------
and interest on the Loans and the Notes at the time outstanding, and all other
amounts owed to the Lenders and to the Administrative Agent under this Agreement
or any of the other Loan Documents and all other Obligations, to be forthwith
due and payable, whereupon the same shall immediately become due and payable
without presentment, demand, protest or other notice of any kind, all of which
are expressly waived, anything in this Agreement or the other Loan Documents to
the contrary notwithstanding, and terminate the Credit Facilities and the
Commitments and any right of the Borrowers to request borrowings thereunder;
provided, that upon the occurrence of an Event of Default specified in Section
10.1(j) or (k), the Credit Facilities and the Commitments shall be automatically
terminated and all Obligations shall automatically become due and payable.
(b) Rights of Collection. Exercise on behalf of the Lenders all of
--------------------
their other rights and remedies under this Agreement, the other Loan Documents
and Applicable Law, in order to satisfy all of the Borrowers' Obligations.
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
-----------------------------------------------
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between the Borrowers, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
SECTION 10.4 Set-off. Except to the extent prohibited by law, in
-------
addition to any rights now or hereafter granted under Applicable Law and not by
way of limitation of any such rights, upon and after the occurrence of any Event
of Default and during the continuance thereof, the Lenders and any assignee or
participant of a Lender in accordance with Section 12.9 are hereby authorized by
the Borrowers at any time or from time to time, without notice to the Borrowers
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all deposits (general or special,
time or demand, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured, excluding government
securities required by Applicable Law to be held as security for worker's
compensation and similar claims and excluding amounts on deposit in the Rebate
Escrow Account) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrowers against and on account of the obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 10.2.
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SECTION 10.5 Adjustments. If any Lender (a "Benefitted Lender")
-----------
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or if any Lender shall at any time receive any Collateral in respect to
its Loans (whether voluntarily or involuntarily, by set-off or otherwise) in a
greater proportion than any such payment to and Collateral received by any other
Lender, if any, in respect of such other Lender's Loans, or interest thereon,
such Benefitted Lender shall, to the extent permitted by Applicable Law,
purchase for cash from the other Lenders such portion of each such other
Lender's Loans, or shall provide such other Lenders with the benefits of any
such Collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of the Lenders; provided, that if all or any portion
--------
of such excess payment or benefits is thereafter recovered from such Benefitted
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned to the extent of such recovery, but without interest. The Borrowers
agree that each Lender so purchasing a portion of another Lender's Loans may
exercise all rights of payment (including, without limitation, rights of set-
off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
SECTION 10.6 Consents. The Borrowers acknowledge that certain
--------
transactions contemplated by this Agreement and the other Loan Documents and
certain actions which may be taken by the Administrative Agent or the Lenders in
the exercise of their respective rights under this Agreement and the other Loan
Documents may require the consent of a Governmental Authority. If counsel to the
Administrative Agent reasonably determines that the consent of a Governmental
Authority is required in connection with the execution, delivery and performance
of any of the aforesaid documents or any documents delivered to the
Administrative Agent or the Lenders in connection therewith or as a result of
any action which may be taken pursuant thereto, then the Borrowers, at their
sole cost and expense, agree to use their best efforts to secure such consent
and to cooperate with the Administrative Agent and the Lenders in any action
commenced by the Administrative Agent or any Lender to secure such consent.
ARTICLE XI
AGENTS
------
SECTION 11.1 Appointment. Each Lender hereby irrevocably appoints
-----------
and authorizes First Union to act as Administrative Agent hereunder and under
the other Loan Documents and to take such actions as agent on its behalf
hereunder and under the other Loan Documents, and to exercise such powers and to
perform such duties, as are specifically delegated to the Administrative Agent
by the terms hereof or thereof, together with such other powers and duties as
are reasonably incidental thereto. Each Lender hereby irrevocably appoints and
authorizes NationsBank to act as Documentation Agent hereunder and under the
other Loan Documents and to take such actions as agent on its behalf hereunder
and under the other Loan Documents, and to exercise such powers and to perform
such duties, as are specifically delegated to the Documentation Agent by the
terms hereof or thereof, together with such other powers and duties as are
reasonably incidental thereto. Each Lender hereby irrevocably appoints and
authorizes Fleet to act as Co-Agent hereunder and under the other Loan Documents
and to take such actions as agent on its behalf hereunder and under the
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other Loan Documents, and to exercise such powers and to perform such duties, as
are specifically delegated to the Co-Agent by the terms hereof or thereof,
together with such other powers and duties as are reasonably incidental thereto.
SECTION 11.2 Nature of Duties. The Agents shall have no duties or
----------------
responsibilities other than those expressly set forth in this Agreement and the
other Loan Documents. The Agents shall not have, by reason of this Agreement or
any other Loan Document, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any other Loan Document, express or implied, is
intended to or shall be so construed as to impose upon the Agents any
obligations or liabilities in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein. The Administrative
Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents or attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact that it
selects with reasonable care. The Administrative Agent shall be entitled to
consult with legal counsel, independent public accountants and other experts
selected by it with respect to all matters pertaining to this Agreement and the
other Loan Documents and its duties hereunder and thereunder and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts. The Lenders
hereby acknowledge that the Administrative Agent shall not be under any duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Loan Document unless it shall be
requested in writing to do so by the Required Lenders (or, where a higher
percentage of the Lenders is expressly required hereunder, such Lenders).
SECTION 11.3 Exculpatory Provisions. No Agent or any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action taken or omitted to be taken by it or such Person
under or in connection with the Loan Documents, except for its or such Person's
own gross negligence or willful misconduct, (ii) responsible in any manner to
any Lender for any recitals, statements, information, representations or
warranties herein or in any other Loan Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for the financial condition of Borrowers or any of their Subsidiaries or any
other Person, or (iii) required to ascertain or make any inquiry concerning the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Loan Document or the existence or possible existence of
any Default or Event of Default, or to inspect the properties, books or records
of the Borrowers or any of their Subsidiaries.
SECTION 11.4 Reliance by Administrative Agent. The Administrative
--------------------------------
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any notice, statement, consent or other communication (including, without
limitation, any thereof by telephone, telecopy, telex, telegram or cable)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons. The Administrative Agent may deem
and treat each Lender as the owner of its interest hereunder for all purposes
hereof unless and until a written notice of the assignment, negotiation or
transfer thereof shall have been given to the Administrative Agent in accordance
with the provisions of this Agreement. The Administrative Agent shall be
entitled to
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refrain from taking or omitting to take any action in connection with this
Agreement or any other Loan Document (i) if such action or omission would, in
the reasonable opinion of the Administrative Agent, violate any applicable law
or any provision of this Agreement or any other Loan Document or (ii) unless and
until it shall have received such advice or concurrence of the Required Lenders
(or, where a higher percentage of the Lenders is expressly required hereunder,
such Lenders) as it deems appropriate or it shall first have been indemnified to
its satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent's acting or refraining from acting hereunder
or under any other Loan Document in accordance with the instructions of the
Required Lenders (or, where a higher percentage of the Lenders is expressly
required hereunder, such Lenders), and such instructions and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders
(including all subsequent Lenders).
SECTION 11.5 Non-Reliance on Administrative Agent and Other Lenders.
------------------------------------------------------
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representation or warranty to it and that no act by the
Administrative Agent or any such Person hereafter taken, including any review of
the affairs of Maxim and its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that (i) it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
properties, financial and other condition and creditworthiness of Maxim and its
Subsidiaries and made its own decision to enter into this Agreement and extend
credit to the Borrowers hereunder, and (ii) it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action hereunder and under the other Loan Documents and to make such
investigation as it deems necessary to inform itself as to the business,
prospects, operations, properties, financial and other condition and
creditworthiness of Maxim and its Subsidiaries. Except as expressly provided in
this Agreement and the other Loan Documents, the Administrative Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information concerning the business,
prospects, operations, properties, financial or other condition or
creditworthiness of Maxim or its Subsidiaries or any other Person that may at
any time come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 11.6 Notice of Default. The Administrative Agent shall not
-----------------
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default unless the Administrative Agent shall have received written notice
from Borrowers or a Lender referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of default." In
the event that the Administrative Agent receives such a notice, the
Administrative Agent will give notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also been
-----------------
furnished to the Lenders, the Administrative Agent shall have no obligation to
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notify the Lenders with respect thereto. The Administrative Agent shall
(subject to Sections 11.4 and 12.10) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders; provided that, unless and until the Administrative Agent shall have
--------
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 11.7 Indemnification. To the extent the Administrative Agent
---------------
is not reimbursed by or on behalf of Borrowers, and without limiting the joint
and several obligations of Borrowers to do so, the Lenders (i) shall and do
hereby indemnify the Administrative Agent and its officers, directors,
employees, agents, attorneys-in-fact and Affiliates, ratably in proportion to
their respective percentages as used in determining the Required Lenders as of
the date of determination, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the repayment in full of the Loans and the termination of
the Commitments) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any documents contemplated by or referred to herein
or the transactions contemplated hereby or thereby or any action taken or
omitted by the Administrative Agent under or in connection with any of the
foregoing, and (ii) shall reimburse the Administrative Agent upon demand,
ratably in proportion to their respective percentages as used in determining the
Required Lenders as of the date of determination, for any expenses incurred by
the Administrative Agent in connection with the preparation, negotiation,
execution, delivery, administration, amendment, modification, waiver or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the other Loan Documents (including, without limitation, reasonable
attorneys' fees and expenses and compensation of agents and employees paid for
services rendered on behalf of the Lenders); provided, however, that no Lender
-------- -------
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the gross negligence or willful misconduct of the
party to be indemnified.
SECTION 11.8 The Administrative Agent in its Individual Capacity.
---------------------------------------------------
With respect to its Commitment, the Loans made by it and the Note or Notes
issued to it, the Administrative Agent in its individual capacity and not as
Administrative Agent shall have the same rights and powers under the Loan
Documents as any other Lender and may exercise the same as though it were not
performing the agency duties specified herein; and the terms "Lenders,"
"Required Lenders," "holders of Notes" and any similar terms shall, unless the
context clearly otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrowers, any of their
Subsidiaries or any of their respective Affiliates as if the Administrative
Agent were not performing the agency duties specified herein, and may accept
fees and other consideration from any of them for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
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SECTION 11.9 Successor Administrative Agent. The Administrative
------------------------------
Agent may resign at any time by giving thirty (30) days' prior written notice to
the Borrowers and the Lenders. Upon any such notice of resignation, the
Required Lenders will, with the prior written consent of the Borrowers (which
consent shall not be unreasonably withheld), appoint from among the Lenders a
successor to the Administrative Agent (provided that the Borrowers' consent
--------
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing). If no successor to the Administrative Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within such thirty-day period, then the retiring Administrative
Agent may, on behalf of the Lenders and after consulting with the Lenders and
the Borrowers, appoint a successor Administrative Agent from among the Lenders.
Upon the acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent. If no successor to the Administrative Agent has accepted
appointment as Administrative Agent by the thirtieth (30th) day following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall thereafter perform all of the duties of the
Administrative Agent hereunder and under the other Loan Documents until such
time, if any, as the Required Lenders appoint a successor Administrative Agent
as provided for hereinabove.
ARTICLE XII
MISCELLANEOUS
-------------
SECTION 12.1 Notices.
-------
(a) Method of Communication. Except as otherwise provided in this
-----------------------
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to any Agent as
understood by such Agent will be deemed to be the controlling and proper notice
in the event of a discrepancy with or failure to receive a confirming written
notice.
(b) Addresses for Notices. Notices to any party shall be sent to it
---------------------
at the following addresses, or any other address as to which all the other
parties are notified in writing.
If to any Borrower: The Maxim Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice
President/Finance
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to First Union,
as Administrative Agent: First Union National Bank
12th Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Syndication Agency Services
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: The Address set forth on Schedule 1.1
(c) Administrative Agent's Office. The Administrative Agent hereby
-----------------------------
designates its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or any subsequent office which shall have been specified
for such purpose by written notice to the Borrowers and Lenders, as the
Administrative Agent's office referred to herein, to which payments due are to
be made and at which Loans will be disbursed.
SECTION 12.2 Expenses. The Borrowers will pay all out-of-pocket
--------
expenses of the Administrative Agent in connection with: (a) the preparation,
execution and delivery of this Agreement and each of the other Loan Documents,
whenever the same shall be executed and delivered, including all syndication and
due diligence expenses, appraiser's fees, search fees, recording fees, taxes and
reasonable fees and disbursements of counsel for the Administrative Agent; (b)
the preparation, execution and delivery of any waiver, amendment or consent by
the Administrative Agent or the Lenders relating to this Agreement or any of the
other Loan Documents including reasonable fees and disbursements of counsel for
the Administrative Agent, search fees, appraiser's fees, recording fees and
taxes imposed in connection therewith; and (c) consulting with one or more
Persons, including appraisers, accountants, engineers and attorneys, concerning
or related to the nature, scope or value of any right or remedy of the
Administrative Agent or any of the Lenders hereunder or under any of the other
Loan Documents, including any review of factual matters in connection therewith,
which expenses shall include the reasonable fees and disbursements of such
Persons. In addition, the Borrowers will pay all out-of-pocket expenses of the
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Administrative Agent and each Lender in connection with prosecuting or defending
any claim in any way arising out of, related to, connected with, or enforcing
any provision of, this Agreement or any of the other Loan Documents, which
expenses shall include the reasonable fees and disbursements of counsel and of
experts and other consultants retained by the Administrative Agent or any of the
Lenders.
SECTION 12.3 Governing Law. This Agreement, the Notes and the other
-------------
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accor dance with the laws of the State of Georgia,
without reference to the conflicts or choice of law principles thereof.
SECTION 12.4 Consent to Jurisdiction. The Borrowers hereby
-----------------------
irrevocably consent to the personal jurisdiction of the state and federal courts
located in ▇▇▇▇ County and ▇▇▇▇▇▇ County, Georgia, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement, the
Notes and the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. The Borrowers
hereby irrevocably consent to the service of a summons and compliant and other
process in any action, claim or proceeding brought by any Agent or Lender in
connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf of itself or its property, in the manner specified in
Section 12.1. Nothing in this Section 12.4 shall affect the right of the
Administrative Agent or any Lender to serve legal process in any other manner
permitted by Applicable Law or to bring any action or proceeding against any
Borrower or its properties in the courts of any other jurisdictions.
SECTION 12.5 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER HEREBY
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 12.6 Reversal of Payment. To the extent any Borrower makes a
-------------------
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
Collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
SECTION 12.7 Injunctive Relief. The Borrowers recognize that, in the
-----------------
event the Borrowers fail to perform, observe or discharge any of their
obligations or liabilities under this Agreement, any remedy of law may prove to
be inadequate relief to the Lenders. Therefore, the Borrowers agree that
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the Lenders, at the Lenders' option, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
SECTION 12.8 Successors and Assigns; Participations.
--------------------------------------
(a) Assignment by Lenders. Each Lender may assign to one or
---------------------
more other Eligible Assignees (each, an "Assignee") all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment, the outstanding Loans made by it and the Note or
Notes held by it), and such assignment may be allocated among the assigning
Lender's Term Loan and Revolver Loans and the related Commitment of the
assigning Lender on other than a pro-rata basis; provided, however, that (i) any
-------- -------
such assignment (other than an assignment to a Lender or an Affiliate of a
Lender) shall not be made without the prior written consent of the
Administrative Agent and, if no Default or Event of Default then exists, the
Borrowers (to be evidenced by their counterexecution of the relevant Assignment
and Acceptance), which consent shall not be unreasonably withheld, (ii) except
in the case of an assignment to a Lender or an Affiliate of a Lender, the amount
of the Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to each such assignment) shall in no event be less than the lesser of
(y) the entire Commitment of such Lender immediately prior to such assignment or
(z) $5,000,000, (iii) no portion of any of the Revolving Loan Commitment or any
Lender's Commitment with respect to the Special Purpose Letter of Credit may be
assigned, except with a pro rata assignment of a corresponding percentage of the
--- ----
other Commitment mentioned in this subsection, and (iv) the parties to each
such assignment will execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance (an
"Assignment and Acceptance") in the form of Exhibit E attached hereto, together
---------
with any Note or Notes subject to such assignment, and will pay a nonrefundable
processing fee of $2,500 to the Administrative Agent for its own account. Upon
such execution, delivery, acceptance and recording of the Assignment and
Acceptance, from and after the effective date specified therein, which effective
date shall be at least five Business Days after the execution thereof (unless
the Administrative Agent shall otherwise agree), (A) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of the assigning Lender hereunder with respect
thereto and (B) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (other than rights under the provisions of
this Agreement and the other Loan Documents relating to indemnification or
payment of fees, costs and expenses, to the extent such rights relate to the
time prior to the effective date of such Assignment and Acceptance) and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of such
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto). The terms and provisions of each Assignment
and Acceptance shall, upon the effectiveness thereof, be incorporated into and
made a part of this Agreement, and the covenants, agreements and obligations of
each Lender set forth therein shall be deemed made to and for the benefit of the
Administrative Agent and the other parties hereto as if set forth at length
herein.
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(b) Maintenance of the Register. The Administrative Agent will
---------------------------
maintain at its address for notices referred to herein a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrowers, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrowers and each Lender at any reasonable time and
from time to time upon reasonable prior notice.
(c) Acceptance of Assignment; Replacement Notes. Upon its receipt of
-------------------------------------------
a duly completed Assignment and Acceptance executed by an assigning Lender and
an Assignee and counterexecuted by the Borrowers (if required), together with
any Note or Notes subject to such assignment and the processing fee referred to
in subsection (a) above, the Administrative Agent will (i) accept such
Assignment and Acceptance, (ii) on the effective date thereof, record the
information contained therein in the Register and (iii) give notice thereof to
the Borrowers and the Lenders. Within five (5) Business Days after its receipt
of such notice, the Borrowers, at their own expense, will execute and deliver to
the Administrative Agent in exchange for the surrendered Note or Notes a new
Note or Notes to the order of such Assignee in an aggregate principal amount
equal to the principal amount of the Commitment (or, if the Commitments have
been terminated, the principal amount of the Loans) assumed by it pursuant to
such Assignment and Acceptance and, to the extent the assigning Lender has
retained its Loans and/or Commitment hereunder, a new Note or Notes to the order
of the assigning Lender in an aggregate principal amount equal to the principal
amount of the Commitment (or, if the Commitments have been terminated, the
principal amount of the Loans) retained by it hereunder. Such new Note or Notes
shall be dated the date of the replaced Note or Notes and shall otherwise be in
substantially the forms of the Notes attached hereto as Exhibits A-1 and A-2.
---------------------
The Administrative Agent will return canceled Notes to the Borrowers.
(d) Participations. Each Lender may, without the consent of the
--------------
Borrowers, the Administrative Agent or any other Lender, sell to one or more
other Persons (each, a "Participant") participations in any portion comprising
less than all of its rights and obligations under this Agreement (including,
without limitation, a portion of its Commitment, the outstanding Loans made by
it and the Note or Notes held by it); provided, however, that (i) such Lender's
--------
obligations under this Agreement shall remain unchanged and such Lender shall
remain solely responsible for the performance of such obligations, (ii) any such
participation shall be in an amount of not less than $3,000,000, but no Lender
shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement, (iii) the Borrowers, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and no Lender shall permit any Participant to have any voting rights
or any right to control the vote of such Lender with respect to any amendment,
modification, waiver, consent or other action hereunder or under any other Loan
Document (except as to actions that would (w) reduce or forgive the principal
amount of, or rate of interest on, any Loan, or reduce or forgive any fees or
other Obligations, (x) extend any date (including without limitation, the
Revolver Facility Termination Date or the dates of the Scheduled Term
Installments) fixed for the payment
-76-
of any principal of or interest on any Loan, any fees or any other Obligations,
(y) release Collateral securing the Obligations (other than (1) upon termination
of the Commitments and payment and satisfaction of all Obligations, (2)
Collateral constituting property being sold or disposed of if Borrowers certify
to the Administrative Agent that the sale or disposition is made in compliance
with the provisions of this Agreement and the Security Documents, upon which
certification the Administrative Agent may conclusively rely in good faith,
without further inquiry, or (3) otherwise in accordance with the terms of this
Agreement and the Security Documents), or (z) increase any Commitment of any
Lender), and (iv) no Participant shall have any rights under this Agreement or
any of the other Loan Documents, each Participant's rights against the granting
Lender in respect of any participation to be those set forth in the
participation agreement, and all amounts payable by the Borrowers hereunder
shall be determined as if such Lender had not granted such participation.
(e) Other Assignments. Nothing in this Agreement shall be construed
-----------------
to prohibit any Lender from pledging or assigning all or any portion of its
rights and interest hereunder or under any Note to any Federal Reserve Bank as
security for borrowings therefrom; provided, however, that no such pledge or
-------- -------
assignment shall release a Lender from any of its obligations hereunder.
(f) Disclosure of Information; Confidentiality. The Administrative
------------------------------------------
Agent and the Lenders shall treat as confidential all non-public information,
including, without limitation, all financial projections, obtained pursuant to
the Loan Documents and shall disclose such information outside their
organizations only as may be deemed appropriate by any of the Administrative
Agent or the Lenders in the exercise of its or their rights under the Loan
Documents or as compelled by judicial or administrative process or by other
requirements of Applicable Law. The Administrative Agent and any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 12.9, disclose to the assignee,
participant, proposed assignee or proposed participant, any information relating
to the Borrowers furnished to the Administrative Agent or such Lender. Nothing
in this Section 12.9 shall prevent or limit the Administrative Agent or any
Lender from furnishing information regarding the Credit Facility in ways that
are customary with respect to the syndication and post-closing sale, purchase,
and trading of interests in commercial and corporate loans.
SECTION 12.9 Amendments, Waivers and Consents; Renewal. Except as set
-----------------------------------------
forth below, any term, covenant, agreement or condition of this Agreement or any
of the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders (or by the Administrative Agent
with the consent of the Required Lenders) and delivered to the Administrative
Agent and, in the case of an amendment, signed by the Borrowers; provided, that
--------
no amendment, waiver or consent shall (a) increase the amount or extend the time
of the obligation of the Lenders to make Loans, (b) extend the originally
scheduled time or times of payment of the principal of any Loan or the time or
times of payment of interest on any Loan, (c) reduce the rate of interest or
fees payable on any Loan, (d) permit any subordination of the principal or
interest on any Loan, (e) release any Collateral or Security Document (other
than (i) upon termination of the Commitments and payment and satisfaction of all
Obligations, (ii) Collateral constituting property being sold or disposed of if
Borrowers certify to the Administrative Agent that the sale or disposition is
made in compliance with the provisions of this Agreement and the Security
Documents, upon
-77-
which certification the Administrative Agent may conclusively rely in good
faith, without further inquiry, or (iii) as specifically permitted in this
Agreement or the applicable Security Document) or (f) amend the provisions of
this Section 12.10 or the definition of Required Lenders, without the prior
written consent of each Lender. In addition, no amendment, waiver or consent to
the provisions of Article XI shall be made without the written consent of the
Administrative Agent.
SECTION 12.10 Performance of Duties. The Borrowers' obligations
---------------------
under this Agreement and each of the Loan Documents shall be performed at the
joint and several sole cost and expense of the Borrowers.
SECTION 12.11 Indemnification. The Borrowers agree to reimburse the
---------------
Administrative Agent and the Lenders for all reasonable costs and expenses,
including reasonable counsel, appraisal, or other expert or consultant fees and
disbursements incurred, and the Borrowers hereby indemnify and hold the
Administrative Agent and the Lenders harmless from and against all losses
suffered by the Administrative Agent and the Lenders in connection with (a) the
exercise by the Administrative Agent or the Lenders of any right or remedy
granted to them under this Agreement or any of the other Loan Documents, (b) any
claim, and the prosecution or defense thereof, arising out of or in any way
connected with this Agreement or any of the other Loan Documents and (c) the
collection or enforcement of the Obligations or any of them; provided, that the
--------
indemnity contained herein shall not apply to the extent that such losses,
claims, damages, liabilities or other expenses result from the gross negligence
or willful misconduct of such indemnified person.
SECTION 12.12 All Powers Coupled with Interest. All powers of
--------------------------------
attorney and other authorizations granted to the Lenders, the Administrative
Agent and any Persons designated by the Administrative Agent or such Lenders
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied or the Credit Facilities have
not been terminated.
SECTION 12.13 Survival of Indemnities. Notwithstanding any
-----------------------
termination of this Agreement, the indemnities to which the Administrative Agent
and the Lenders are entitled under the provisions of this Article XII and any
other provision of this Agreement and the Loan Documents shall continue in full
force and effect and shall protect the Administrative Agent and the Lenders
against events arising after such termination as well as before.
SECTION 12.14 Provision of Loan Documents. Upon request by Maxim,
---------------------------
the Administrative Agent shall use its best efforts to provide to Maxim, or to
cause to be provided to Maxim, a copy of the final forms of this Agreement and
the other Loan Documents on a diskette or other machine readable format.
SECTION 12.15 Titles and Captions. Titles and captions of Articles,
-------------------
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
-78-
SECTION 12.16 Severability of Provisions. Any provision of this
--------------------------
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 12.17 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 12.18 Maxim as Agent for Other Borrowers. Each Borrower
----------------------------------
hereby irrevocably appoints and authorizes Maxim (a) to provide the
Administrative Agent with all notices with respect to Loans for the benefit of
any other Borrower and all other notices and instructions under this Agreement
and (b) to take, on behalf of Borrowers, all actions, including, without
limitation, the provision of consents, as are required or permitted to be taken
by any or all of the Borrowers pursuant to this Agreement.
SECTION 12.19 Term of Agreement. This Agreement shall remain in
-----------------
effect from the Closing Date through and including the date upon which all
Obligations shall have been indefeasibly and irrevocably paid and satisfied in
full and the Commitments have been terminated. No termination of this Agreement
shall affect the rights and obligations of the parties hereto arising prior to
such termination.
-79-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, all as of the day and year first
written above.
[CORPORATE SEAL] THE MAXIM GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: EVP/FINANCE
---------------------------------
[CORPORATE SEAL] IMAGE INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: ASST. SECRETARY
---------------------------------
[CORPORATE SEAL] KINNAIRD & ▇▇▇▇▇▇▇ INTERIORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] KINNAIRD & ▇▇▇▇▇▇▇ DRAPERY CO., INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] FIRST QUALITY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
Credit Agreement - Signature Page
[CORPORATE SEAL] ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INTERIORS &
ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] BAY AREA CARPETS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] CARPET WORLD, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] RNA ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] GCO, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: SECRETARY
---------------------------------
Credit Agreement - Signature Page
[CORPORATE SEAL] ▇▇▇▇▇▇ CARPETS & FLOORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: TREASURER
---------------------------------
[CORPORATE SEAL] RUGS N REMNANTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] CARPET GALLERY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] LOSANTVILLE CARPET OUTLET, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] AMERICAN CARPETS & INTERIORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
Credit Agreement - Signature Page
[CORPORATE SEAL] INVESTOR MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] GCO CARPET OUTLET, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: SECRETARY
---------------------------------
[CORPORATE SEAL] MAXIM RETAIL GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] CARPET COUNTRY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
[CORPORATE SEAL] CARPETMAX, L.P.
By: The Maxim Group, Inc., as its sole general
partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: EVP/FINANCE
---------------------------------
Credit Agreement - Signature Page
[CORPORATE SEAL] TRI-R OF ORLANDO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
[CORPORATE SEAL] CARPETMAX OF PALM BEACH, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
[CORPORATE SEAL] CREDITMAX CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
[CORPORATE SEAL] CARPETMAX OF NEW MEXICO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
[CORPORATE SEAL] CARPETMAX OF CHARLOTTE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
Credit Agreement - Signature Page
[CORPORATE SEAL] CLOUD CARPETS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
[CORPORATE SEAL] CARPETMAX ALABAMA CONTRACT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
[CORPORATE SEAL] ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ CARPETMAX OF TENNESSEE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
[CORPORATE SEAL] MAXIM EQUIPMENT LEASING
COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: VICE PRES.
---------------------------------
FIRST UNION NATIONAL BANK, as
Administrative Agent and Lender
By: /s/ ▇. ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇
-------------------------------
Title: SR. V. P.
------------------------------
Credit Agreement - Signature Page
NATIONSBANK, N.A., as Documentation Agent
and Lender
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Title: Senior Vice-President
---------------------------------
Credit Agreement - Signature Page
FLEET NATIONAL BANK, as Lender
and as Co-Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Title: VICE PRESIDENT
---------------------------------
Credit Agreement - Signature Page
SUNTRUST BANK, ATLANTA, as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Assistant Vice President
---------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Group Vice President
---------------------------------
Credit Agreement - Signature Page
Schedule 1.1: Lenders and Commitments
--------------------------------------
-------------------------------------------------------------------------------------------------------------------
Total Allocation
Lender Revolver Term SPCL Percentage
-------------------------------------------------------------------------------------------------------------------
Global $130,000,000.00 $70,000,000.00 $29,000,000.00 $31,000,000.00 100.00000000000%
-------------------------------------------------------------------------------------------------------------------
First Union National $ 60,000,000.00 $32,307,692.31 $13,384,615.38 $14,307,692.31 46.▇▇▇▇▇▇▇▇▇▇%
Bank
-------------------------------------------------------------------------------------------------------------------
Fleet National Bank $ 25,000,000.00 $13,461,538.46 $ 5,576,923.08 $ 5,961,538.46 19.2307692308%
-------------------------------------------------------------------------------------------------------------------
NationsBank, N.A. $ 25,000,000.00 $13,461,538.46 $ 5,576,923.08 $ 5,961,538.46 19.2307692308%
-------------------------------------------------------------------------------------------------------------------
SunTrust Bank, Atlanta $ 20,000,000.00 $10,769,230.77 $ 4,461,538.46 $ 4,769,230.77 15.3846153846%
-------------------------------------------------------------------------------------------------------------------
Pro Rata Allocations
Revolver 53.8461538462%
Term 22.▇▇▇▇▇▇▇▇▇▇%
SPCL 23.8461538462%
----------------
100.0000000000%