EXHIBIT 4.3
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REGISTRATION RIGHTS AGREEMENT
DATED AS OF OCTOBER 16, 1997
AMONG
THE MAXIM GROUP, INC.,
IMAGE INDUSTRIES, INC.,
KINNAIRD & FRANCKE INTERIORS, INC.,
KINNAIRD & FRANCKE DRAPERY CO., INC.,
FIRST QUALITY, INC.,
STEVE PETERSON INTERIORS & ASSOCIATES, INC.,
BAY AREA CARPETS, INC.,
CARPET WORLD, INC.,
RNA ENTERPRISES, INC.,
GCO, INC.,
DUBOSE CARPETS & FLOORS, INC.,
RUGS N REMNANTS, INC.,
CARPET GALLERY, INC. (GEORGIA),
LOSANTVILLE CARPET OUTLET, INC.,
AMERICAN CARPETS & INTERIORS, INC.,
INVESTOR MANAGEMENT, INC.,
GCO CARPET OUTLET, INC.,
MAXIM RETAIL GROUP, INC.,
CARPET COUNTRY, INC.,
CARPETMAX, L.P.,
TRI-R OF ORLANDO, INC.,
CARPETMAX OF PALM BEACH, INC.,
CREDITMAX CORP.,
CARPETMAX OF NEW MEXICO, INC.,
CARPETMAX OF CHARLOTTE, INC.,
CLOUD CARPETS, INC.,
CARPETMAX ALABAMA CONTRACT, INC.,
BAILEY & ROBERTS CARPETMAX OF TENNESSEE, INC.
AND
MAXIM EQUIPMENT LEASING COMPANY, INC.,
AND
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
FIRST UNION CAPITAL MARKETS CORP.,
AND
WHEAT, FIRST SECURITIES, INC.
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into this 16th day of October, 1997, among The Maxim Group, Inc., a
Delaware corporation (the "Company"), Image Industries, Inc., a Delaware
corporation, Kinnaird & Francke Interiors, Inc., a Delaware corporation,
Kinnaird & Francke Drapery Co., Inc., a Kentucky corporation, First Quality,
Inc., a Delaware corporation, Steve Peterson Interiors & Associates, Inc., a
Utah corporation, Bay Area Carpets, Inc., a Delaware corporation, Carpet World,
Inc., a Delaware corporation, RNA Enterprises, Inc., a Delaware corporation,
GCO, Inc., a Nevada corporation, Dubose Carpets & Floors, Inc., a Delaware
corporation, Rugs N Remnants, Inc., a Texas corporation, Carpet Gallery, Inc.
(Georgia), a Georgia corporation, Losantville Carpet Outlet, Inc., an Indiana
corporation, American Carpets & Interiors, Inc., a Georgia corporation, Investor
Management, Inc., an Alabama corporation, GCO Carpet Outlet, Inc., an Alabama
corporation, Maxim Retail Group, Inc., a Georgia corporation, Carpet Country,
Inc., a Georgia corporation, CarpetMAX, L.P., a Georgia limited partnership,
Tri-R of Orlando, Inc., a Georgia corporation, CarpetMAX of Palm Beach, Inc., a
Georgia corporation, CreditMAX Corp., a Georgia corporation, CarpetMAX of New
Mexico, Inc., a Georgia corporation, CarpetMAX of Charlotte, Inc., a Georgia
corporation, Cloud Carpets, Inc., a Georgia corporation, CarpetMAX Alabama
Contract, Inc., an Alabama corporation, Bailey & Roberts CarpetMAX of Tennessee,
Inc., a Tennessee corporation, and Maxim Equipment Leasing Company, Inc., a
Georgia corporation, as guarantors (collectively, the "Guarantors"), and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, First Union Capital Markets Corp.
and Wheat, First Securities, Inc. (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
October 9, 1997, among the Company, the Guarantors and the Initial Purchasers
(the "Purchase Agreement"), which provides for the sale by the Company to the
Initial Purchasers of an aggregate of $100 million principal amount of the
Company's 9 1/4% Senior Subordinated Notes due 2007, Series A, and related
guarantees by the Guarantors (collectively, the "Securities"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
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As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
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to time.
"1934 Act" shall mean the Securities Exchange Act of l934, as amended
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from time to time.
"Closing Date" shall mean the Closing Time as defined in the Purchase
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Agreement.
"Company" shall have the meaning set forth in the preamble and shall
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also include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
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depositary appointed by the Company, provided, however, that such depositary
must have an address in the Borough of Manhattan, in the City of New York.
"Exchange Offer" shall mean the exchange offer by the Company of
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Exchange Securities for Registrable Securities pursuant to Section 2.1
hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
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Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
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registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, including the Prospectus contained therein, all exhibits thereto
and all documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2.1
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hereof.
"Exchange Securities" shall mean (i) the 9 1/4% Senior Subordinated
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Notes due 2007, Series B issued by the Company and (ii) the related
guarantees issued by the Guarantors, in each case under the Indenture
containing terms identical to the Securities in all material respects
(except for references to certain interest rate provisions, restrictions on
transfers and restrictive legends), to be offered to Holders of Securities
in exchange for Registrable Securities (other than Unsold Securities)
pursuant to the Exchange Offer.
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"Holder" shall mean an Initial Purchaser, for so long as it owns any
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Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture.
"Indenture" shall mean the Indenture relating to the Securities, the
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Exchange Securities and the Private Exchange Securities, dated as of October
16, 1997, between the Company and State Street Bank and Trust Company, as
trustee, as the same may be amended, supplemented, waived or otherwise
modified from time to time in accordance with the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the meaning set
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forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
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aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company and other obligors on
the Registrable Securities or any Affiliate (as defined in the Indenture) of
the Company shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage amount.
"Participating Broker-Dealer" shall mean any of Merrill Lynch, Pierce,
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Fenner & Smith Incorporated, First Union Capital Markets Corp., Wheat, First
Securities, Inc. and any other broker-dealer which makes a market in the
Securities and exchanges Registrable Securities (other than Unsold
Securities) in the Exchange Offer for Exchange Securities.
"Person" shall mean an individual, partnership (general or limited),
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corporation, limited liability company, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
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Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all material
incorporated by reference therein.
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"Private Exchange" shall have the meaning set forth in Section 2.1
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hereof.
"Private Exchange Securities" shall have the meaning set forth in
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Section 2.1 hereof.
"Purchase Agreement" shall have the meaning set forth in the preamble.
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"Registrable Securities" shall mean the Securities and, if issued, the
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Private Exchange Securities; provided, however, that Securities and, if
issued, the Private Exchange Securities, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities
and, if issued, such Private Exchange Securities shall have been declared
effective under the 1933 Act and such Securities shall have been disposed of
pursuant to such Registration Statement, (ii) such Securities and, if
issued, such Private Exchange Securities have been sold to the public
pursuant to Rule l44 (or any similar provision then in force, but not Rule
144A) under the 1933 Act, (iii) such Securities and, if issued, such Private
Exchange Securities shall have ceased to be outstanding or (iv) the Exchange
Offer is consummated (except in the case of Unsold Securities and Private
Exchange Securities).
"Registration Expenses" shall mean any and all expenses incident to
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performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees,
including, if applicable, the fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to be retained
by any holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws and compliance with
the rules of the NASD (including reasonable fees and disbursements of
counsel for any underwriters or Holders in connection with blue sky
qualification of any of the Exchange Securities or Registrable Securities
and any filings with the NASD), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all fees and expenses incurred in connection with
the listing, if any, of any of the Registrable Securities on any securities
exchange or exchanges, (v) all rating agency fees, (vi) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, (vii) the fees and expenses of the Trustee, and any escrow agent
or custodian,
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(viii) the reasonable fees and expenses of the Initial Purchasers in
connection with any Shelf Registration Statement, including the reasonable
fees and expenses of counsel to the Initial Purchasers in connection
therewith, (ix) in connection with any Shelf Registration Statement, the
reasonable fees and disbursements of Fried, Frank, Harris, Shriver &
Jacobson, special counsel representing the Holders of Registrable Securities
and (x) any fees and disbursements of the underwriters customarily required
to be paid by issuers or sellers of securities and the fees and expenses of
any special experts retained by the Company in connection with any
Registration Statement, but excluding underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
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Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments
and supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SEC" shall mean the United States Securities and Exchange Commission
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or any successor agency or government body performing the functions
currently performed by the United States Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
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Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
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statement of the Company pursuant to the provisions of Section 2.2 of this
Agreement which covers all of the Registrable Securities on an appropriate
form under Rule 415 under the 1933 Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Securities, the
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Exchange Securities and the Private Exchange Securities under the Indenture.
"Unsold Securities" shall have the meaning set forth in Section 2.1
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hereof.
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2. Registration Under the 1933 Act.
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2.1 Exchange Offer. The Company and the Guarantors shall (A) prepare
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and, as soon as practicable but not later than 30 days following the Closing
Date, file with the SEC an Exchange Offer Registration Statement on an
appropriate form under the 1933 Act with respect to a proposed Exchange Offer
and the issuance and delivery to the Holders, in exchange for the Registrable
Securities (other than Unsold Securities and Private Exchange Securities), a
like principal amount of Exchange Securities, (B) use their best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the 1933 Act within 90 days of the Closing Date, (C) use their best efforts to
keep the Exchange Offer Registration Statement effective until the closing of
the Exchange Offer and (D) use their best efforts to cause the Exchange Offer to
be consummated not later than 120 days following the Closing Date. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company and the Guarantors shall
promptly commence the Exchange Offer, it being the objective of such Exchange
Offer to enable each Holder eligible and electing to exchange Registrable
Securities (other than Unsold Securities and Private Exchange Securities) for
Exchange Securities (assuming that such Holder (a) is not an affiliate of the
Company within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-
dealer tendering Registrable Securities acquired directly from the Company for
its own account, (c) acquired the Exchange Securities in the ordinary course of
such Holder's business and (d) has no arrangements or understandings with any
Person to participate in the Exchange Offer for the purpose of distributing the
Exchange Securities) to transfer such Exchange Securities from and after their
receipt without any limitations or restrictions under the 1933 Act and without
material restrictions under the securities laws of a substantial proportion of
the several states of the United States.
In connection with the Exchange Offer, the Company and the Guarantors
shall:
(a) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a period of not
less than 30 calendar days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law) (such period referred to
herein as the "Exchange Period");
(c) utilize the services of the Depositary for the Exchange Offer;
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(d) permit Holders to withdraw tendered Registrable Securities at any
time prior to 5:00 p.m. (Eastern Standard Time), on the last business day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities delivered for exchange,
and a statement that such Holder is withdrawing such Holder's election to have
such Registrable Securities exchanged;
(e) notify each Holder that any Registrable Security not tendered will
remain outstanding and continue to accrue interest, but will not retain any
rights under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(f) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer the Initial Purchasers
hold any Securities acquired by them and having the status of an unsold
allotment in the initial distribution ("Unsold Securities"), the Company and the
Guarantors upon the request of any Initial Purchaser shall, simultaneously with
the delivery of the Exchange Securities in the Exchange Offer, issue and deliver
to such Initial Purchaser in exchange (the "Private Exchange") for the Unsold
Securities held by such Initial Purchaser, a like principal amount of debt
securities of the Company, guaranteed by the Guarantors on a senior basis, that
are identical (except that such securities shall bear appropriate transfer
restrictions) to the Exchange Securities (the "Private Exchange Securities").
The Exchange Securities and the Private Exchange Securities shall be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture and which, in either case, has been qualified under
the Trust Indenture Act of 1939, as amended (the "TIA"), or is exempt from such
qualification and shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture but that the
Private Exchange Securities shall be subject to such transfer restrictions. The
Indenture or such indenture shall provide that the Exchange Securities, the
Private Exchange Securities and the Securities shall vote and consent together
on all matters as one class and that none of the Exchange Securities, the
Private Exchange Securities or the Securities will have the right to vote or
consent as a separate class on any matter. The Private Exchange Securities
shall be of the same series as and the Company and the Guarantors shall use all
commercially reasonable efforts to have the Private Exchange Securities bear the
same CUSIP number as the Exchange Securities. Neither the Company nor any of
the Guarantors shall have any liability under this
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Agreement solely as a result of such Private Exchange Securities not bearing the
same CUSIP number as the Exchange Securities.
As soon as practicable after the close of the Exchange Offer and/or the
Private Exchange, the Company and the Guarantors shall:
(i) accept for exchange all Registrable Securities (other than
Unsold Securities and Private Exchange Securities) duly tendered and
not validly withdrawn pursuant to the Exchange Offer in accordance with
the terms of the Exchange Offer Registration Statement and the letter
of transmittal which shall be an exhibit thereto;
(ii) accept for exchange all Unsold Securities properly tendered
pursuant to the Private Exchange;
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities so accepted for exchange; and
(iv) cause the Trustee promptly to authenticate and deliver
Exchange Securities or Private Exchange Securities, as the case may be,
to each Holder of Registrable Securities so accepted for exchange in a
principal amount equal to the principal amount of the Registrable
Securities of such Holder so accepted for exchange.
Interest on each Exchange Security and Private Exchange Security will
accrue from the last date on which interest was paid on the Registrable
Securities surrendered in exchange therefor or, if no interest has been paid on
the Registrable Securities, from the date of original issuance. The Exchange
Offer and the Private Exchange shall not be subject to any conditions, other
than (i) that the Exchange Offer or the Private Exchange, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) the due tendering of Registrable
Securities in accordance with the Exchange Offer and the Private Exchange, (iii)
that each Holder of Registrable Securities exchanged in the Exchange Offer shall
have represented that all Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and that at the time of the
consummation of the Exchange Offer it shall have no arrangement or understanding
with any person to participate in the distribution (within the meaning of the
1933 Act) of the Exchange Securities and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available and (iv) that no action or
proceeding shall have been instituted or threatened in any court or by or before
any governmental agency with respect to the Exchange Offer or the Private
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Exchange which, in the Company's and the Guarantors' judgment, would reasonably
be expected to impair the ability of the Company and the Guarantors to proceed
with the Exchange Offer or the Private Exchange. The Company and the Guarantors
shall inform the Initial Purchasers of the names and addresses of the Holders to
whom the Exchange Offer is made, and the Initial Purchasers shall have the right
to contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
2.2 Shelf Registration. (i) If, because of any changes in law, SEC
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rules or regulations or applicable interpretations thereof by the staff of the
SEC, the Company and the Guarantors are not permitted to effect the Exchange
Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason the
Exchange Offer Registration Statement is not declared effective within 90 days
following the original issue of the Registrable Securities or the Exchange Offer
is not consummated within 120 days after the original issue of the Registrable
Securities, (iii) upon the request of any of the Initial Purchasers or (iv) if a
Holder is not permitted to participate in the Exchange Offer or participates in
the Exchange Offer but does not receive fully tradeable Exchange Securities
pursuant to the Exchange Offer, then in case of each of clauses (i) through (iv)
the Company and the Guarantors shall, whether or not the Exchange Offer has been
consummated at their cost:
(a) As promptly as practicable, file with the SEC, and thereafter
shall use its best efforts to cause to be declared effective as
promptly as practicable but no later than 120 days after the original
issue of the Securities, a Shelf Registration Statement relating to the
offer and sale of the Registrable Securities by the Holders from time
to time in accordance with the methods of distribution elected by the
Majority Holders participating in the Shelf Registration and set forth
in such Shelf Registration Statement.
(b) Use their best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years
from the date the Shelf Registration Statement is declared effective by
the SEC (or one year from the effective date of the Shelf Registration
Statement if such Shelf Registration Statement solely covers
Registrable Securities of the Initial Purchasers), or for such shorter
period that will terminate when all Registrable Securities covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding or otherwise to be
Registrable Securities or when all Registrable Securities became
eligible for resale pursuant to Rule 144 under the 1933 Act without
volume and manner of sale restrictions (the
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"Effectiveness Period"); provided, however, that the Effectiveness
Period in respect of the Shelf Registration Statement shall be extended
to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements of Rule 174 under the 1933 Act and as
otherwise provided herein.
(c) Notwithstanding any other provisions hereof, use their best
efforts to ensure that (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any
supplement thereto complies in all material respects with the 1933 Act
and the rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any Prospectus
forming part of any Shelf Registration Statement, and any supplement to
such Prospectus (as amended or supplemented from time to time), does
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in light of
the circumstances under which they were made, not misleading.
The Company and the Guarantors further agree, if necessary, to
supplement or amend the Shelf Registration Statement, as required by Section
3(b) below, and to furnish to the Holders of Registrable Securities copies of
any such supplement or amendment promptly after its being used or filed with the
SEC; provided, however, that no Holder shall be entitled to have its Registrable
Securities covered by the Shelf Registration Statement unless such Holder agrees
in writing to be bound by the terms and provisions of this Agreement.
2.3 Expenses. The Company and the Guarantors shall pay all
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Registration Expenses in connection with the registration pursuant to Section
2.1 or 2.2. Each Holder shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
2.4. Effectiveness. (a) The Company and the Guarantors will be deemed
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not to have used their best efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to become, or
to remain, effective during the requisite period if the Company or any of the
Guarantors voluntarily takes any action that would, or omits to take any action
which omission would, result in any such Registration Statement not being
declared effective or in the Holders of Registrable Securities covered thereby
not being able to exchange or offer and sell such Registrable
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Securities during that period as and to the extent contemplated hereby, unless
(i) such action is required by applicable law or (ii) such action is taken by
the Company and the Guarantors in good faith and for valid business reasons (but
not including avoidance of the Company's or the Guarantors', as applicable,
obligations hereunder), including a material corporate transaction, so long as
the Company and the Guarantors promptly comply with the requirements of Section
3(k) hereof, if applicable.
(b) An Exchange Offer Registration Statement pursuant to Section 2.1
hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not
be deemed to have become effective unless it has been declared effective by the
SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to an Exchange Offer Registration
Statement or a Shelf Registration Statement is interfered with by any stop
order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not to
have become effective during the period of such interference, until the offering
of Registrable Securities pursuant to such Registration Statement may legally
resume.
2.5 Interest. The Indenture executed in connection with the
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Securities will provide that in the event that either (a) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to the 30th
calendar day following the date of original issue of the Securities, (b) the
Exchange Offer Registration Statement has not been declared effective on or
prior to the 90th calendar day following the date of original issue of the
Securities, (c) with respect to any Registrable Securities (other than Unsold
Securities and Private Exchange Securities), the Exchange Offer is not
consummated with respect to any such Registrable Securities or a Shelf
Registration Statement is not declared effective, in either case, on or prior to
the 120th calendar day following the date of original issue of the Securities or
(d) with respect to Unsold Securities and Private Exchange Securities, a Shelf
Registration Statement is not declared effective on or prior to the 120th
calendar day following the date of original issue of the Securities (each such
event referred to in clauses (a) through (d) above, a "Registration Default"),
the interest rate borne by the Securities and the Private Exchange Securities
shall be increased ("Additional Interest") by one-quarter of one percent per
annum upon the occurrence of each Registration Default, which rate will increase
by one quarter of one percent each 90-day period that such Additional Interest
continues to accrue under any such circumstance, provided that the maximum
aggregate increase in the interest rate will in no event exceed one percent (1%)
per annum. Upon the cure of all Registration Defaults, the accrual of
Additional Interest will cease and the interest rate will revert to the original
rate.
If the Shelf Registration Statement is unusable by the Holders for any
reason, and the aggregate number of days in any consecutive twelve-month period
for which the Shelf Registration Statement shall not be usable exceeds 30 days
in the
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aggregate, then the interest rate borne by the Securities and the Private
Exchange Securities will be increased by 0.25% per annum of the principal amount
of the Securities and the Private Exchange Securities for the first 90-day
period (or portion thereof) beginning on the 31st such date that such Shelf
Registration Statement ceases to be usable, which rate shall be increased by an
additional 0.25% per annum of the principal amount of the Securities and the
Private Exchange Securities at the beginning of each subsequent 90-day period,
provided that the maximum aggregate increase in the interest rate will in no
event exceed one percent (1%) per annum. Upon the Shelf Registration Statement
once again becoming usable, the interest rate borne by the Securities and the
Private Exchange Securities will be reduced to the original interest rate if the
Company is otherwise in compliance with this Agreement at such time. Additional
Interest shall be computed based on the actual number of days elapsed in each
90-day period in which the Shelf Registration Statement is unusable.
The Company and the Guarantors shall notify the Trustee within three
Business Days after each and every date on which an event occurs in respect of
which Additional Interest is required to be paid (an "Event Date"). Additional
Interest shall be paid by depositing with the Trustee, in trust, for the benefit
of the Holders of Registrable Securities, on or before the applicable semiannual
interest payment date, immediately available funds in sums sufficient to pay the
Additional Interest then due. The Additional Interest due shall be payable on
each interest payment date to the record Holders of Securities and Private
Exchange Securities entitled to receive the interest payment to be paid on such
date as set forth in the Indenture. Each obligation to pay Additional Interest
shall be deemed to accrue from and including the day following the applicable
Event Date.
3. Registration Procedures.
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In connection with the obligations of the Company and the Guarantors
with respect to Registration Statements pursuant to Sections 2.1 and 2.2 hereof,
the Company and the Guarantors shall:
(a) prepare and file with the SEC a Registration Statement, within the
relevant time period specified in Section 2, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company and the Guarantors,
(ii) shall, in the case of a Shelf Registration, be available for the sale of
the Registrable Securities by the selling Holders thereof, (iii) shall comply as
to form in all material respects with the requirements of the applicable form
and include or incorporate by reference all financial statements required by the
SEC to be filed therewith or incorporated by reference therein, and (iv) shall
comply in all respects with the requirements of Regulation S-T under the 1933
Act, and use their best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
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(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under applicable
law to keep such Registration Statement effective for the applicable period; and
cause each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the 1933 Act and
comply with the provisions of the 1933 Act applicable to them with respect to
the disposition of all securities covered by each Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least five business days prior to filing, that a
Shelf Registration Statement with respect to the Registrable Securities is being
filed and advising such Holders that the distribution of Registrable Securities
will be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) subject to the third from
last paragraph of this Section 3, hereby consent to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto;
(d) use their best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such Holder
and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that none of the
Company and the Guarantors shall be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), or (ii) take any
action which would subject it to general service of process or taxation in any
such jurisdiction where it is not then so subject;
13
(e) notify promptly each Holder of Registrable Securities under a Shelf
Registration or any Participating Broker-Dealer who has notified the Company and
the Guarantors that it is utilizing the Exchange Offer Registration Statement as
provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such advice in writing promptly (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) in the case of a Shelf Registration, if,
between the effective date of such Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company and the Guarantors contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material respects,
(v) of the happening of any event or the discovery of any facts during the
period a Shelf Registration Statement is effective which makes any statement
made in such Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements therein not
misleading, (vi) of the receipt by the Company and the Guarantors of any
notification with respect to the suspension of the qualification of the
Registrable Securities or the Exchange Securities, as the case may be, for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (vii) of any determination by the Company and the Guarantors that a
post-effective amendment to such Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution" which section shall be reasonably acceptable to the Initial
Purchasers, and which shall contain a summary statement of the positions taken
or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that holds Registrable Securities
acquired for its own account as a result of market-making activities or other
trading activities and that will be the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of Exchange Securities to be received by such
broker-dealer in the Exchange Offer, whether such positions or policies have
been publicly disseminated by the staff of the SEC or such positions or
policies, in the reasonable judgment of the Initial Purchasers and its counsel,
represent the prevailing views of the staff of the SEC, including a statement
that any such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory underwriter
and must deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of such
14
Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has
delivered to the Company the notice referred to in Section 3(e), without charge,
as many copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any amendment or supplement
thereto, as such Participating Broker-Dealer may reasonably request, (iii)
subject to the third from last paragraph of this Section 3, hereby consent to
the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any Person subject to the
prospectus delivery requirements of the SEC, including all Participating Broker-
Dealers, in connection with the sale or transfer of the Exchange Securities
covered by the Prospectus or any amendment or supplement thereto and (iv)
include in the transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Exchange Offer (x) the following
provision:
"If the exchange offeree is not a broker-dealer, it represents that it
is not engaged in, and does not intend to engage in, a distribution of
the Exchange Securities. If the exchange offeree is a broker-dealer
holding Registrable Securities acquired for its own account as a result
of market-making activities or other trading activities, it will
deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of Exchange Securities received in respect
of such Registrable Securities pursuant to the Exchange Offer;" and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company and the Guarantors agree to deliver to the Initial Purchasers on behalf
of the Participating Broker-Dealers upon the effectiveness of the Exchange Offer
Registration Statement (i) an opinion of counsel or opinions of counsel
substantially in the form attached hereto as Exhibit A, (ii) officers'
certificates substantially in the form customarily delivered in a public
offering of debt securities and (iii) a comfort letter or comfort letters in
customary form if permitted by Statement on Auditing Standards No. 72 of the
American Institute of Certified Public Accountants (or if such a comfort letter
is not permitted, an agreed upon procedures letter in customary form) at least
as broad in scope and coverage as the comfort letter or comfort letters
delivered to the Initial Purchasers in connection with the initial sale of the
Securities to the Initial Purchasers;
(g) (i) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (ii) in the case of a Shelf Registration, furnish counsel
for the Holders of Registrable Securities copies of any comment letters received
from the SEC or any other
15
request by the SEC or any state securities authority for amendments or
supplements to a Registration Statement and Prospectus or for additional
information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, and each underwriter, if any, without charge, at least
one conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least one business day prior to the closing of any sale of
Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Sections 3(e)(v)
and 3(e)(vi) hereof, use their best efforts to prepare a supplement or post-
effective amendment to the Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities or Participating Broker-Dealers, such Prospectus will not contain at
the time of such delivery any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or will remain so
qualified. The Company agrees to notify each Holder to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an event, and
each Holder hereby agrees to suspend use of the Prospectus until the Company and
the Guarantors have amended or supplemented the Prospectus to correct such
misstatement or omission. At such time as such public disclosure is otherwise
made or the Company determines that such disclosure is not necessary, in each
case to correct any misstatement of a material fact or to include any omitted
material fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such number of copies of the
Prospectus, as amended or supplemented, as such Holder may reasonably request;
(l) in the case of a Shelf Registration, a reasonable time prior to the
filing of any Registration Statement, any Prospectus, any amendment to a
Registration
16
Statement or amendment or supplement to a Prospectus or any document which is to
be incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document to
the Initial Purchasers on behalf of such Holders; and make representatives of
the Company and the Guarantors as shall be reasonably requested by the Holders
of Registrable Securities, or the Initial Purchasers on behalf of such Holders,
available for discussion of such document;
(m) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates for
the Exchange Securities or the Registrable Securities, as the case may be, in a
form eligible for deposit with the Depositary;
(n) (i) cause the Indenture to be qualified under the TIA in
connection with the registration of the Exchange Securities or Registrable
Securities, as the case may be, (ii) cooperate with the Trustee and the Holders
to effect such changes to the Indenture as may be required for the Indenture to
be so qualified in accordance with the terms of the TIA and (iii) execute, and
use their best efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely
manner;
(o) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in similar underwritten offerings as may be reasonably requested by
them;
(ii) obtain opinions of counsel to the Company and the Guarantors
and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the holders of a majority in principal amount
of the Registrable Securities being sold) addressed to each selling
Holder and the underwriters, if any, covering the matters customarily
covered in opinions requested in sales of securities or underwritten
offerings and such other matters as may be reasonably requested by such
Holders and underwriters;
17
(iii) obtain "cold comfort" letters and updates thereof from the
Company's and the Guarantors' independent certified public accountants
addressed to the underwriters, if any, and use reasonable efforts to
have such letter addressed to the selling Holders of Registrable
Securities (to the extent consistent with Statement on Auditing
Standards No. 72 of the American Institute of Certified Public
Accounts), such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters to underwriters
in connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders and
an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Securities, which agreement shall
be in form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same
to set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth
in Section 4 hereof with respect to the underwriters and all other
parties to be indemnified pursuant to said Section or, at the request
of any underwriters, in the form customarily provided to such
underwriters in similar types of transactions; and
(vi) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings to the
Holders of a majority in principal amount of the Registrable Securities
being sold and the managing underwriters, if any.
The above shall be done at (i) the effectiveness of such Registration Statement
(and each post-effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required thereunder. In
the case of any underwritten offering, the Company and the Guarantors shall
provide written notice to the Holders of all Registrable Securities of such
underwritten offering at least 30 days prior to the filing of a prospectus
supplement for such underwritten offering. Such notice shall (x) offer each such
Holder the right to participate in such underwritten offering, (y) specify a
date, which shall be no earlier than 10 days following the date of such notice,
by which such Holder must inform the Company of its intent to participate in
such underwritten offering and (z) include the instructions such Holder must
follow in order to participate in such underwritten offering;
18
(p) in the case of a Shelf Registration or if a Prospectus is required
to be delivered by any Participating Broker-Dealer, make available for
inspection by representatives of the Holders of the Registrable Securities, any
underwriters participating in any disposition pursuant to a Shelf Registration
Statement, any Participating Broker-Dealer and any counsel or accountant
retained by any of the foregoing, upon reasonable notice, at reasonable terms
and in a reasonable manner, all relevant financial and other records, pertinent
corporate documents and properties of the Company and the Guarantors reasonably
requested by any such persons, and cause the respective officers, directors,
employees, and any other agents of the Company and the Guarantors to supply all
information reasonably requested by any such representative, underwriter,
special counsel or accountant in connection with a Registration Statement, and
make such representatives of the Company and the Guarantors available for
discussion of such documents as shall be reasonably requested by the Initial
Purchasers; provided, however, that such Persons shall first agree in writing
with the Company and the Guarantors that any information that is reasonably and
in good faith designated by the Company and the Guarantors in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of such Shelf Registration
Statement or use of any Prospectus) or legal process, (iii) such information
becomes generally available to the public other than as a result of a disclosure
or failure to safeguard such information by such Person or (iv) such information
becomes available to such Person from a source other than the Company and its
subsidiaries and such source is not bound by a confidentiality agreement;
(q) (i) in the case of an Exchange Offer Registration Statement, a
reasonable time prior to the filing of any Exchange Offer Registration
Statement, any Prospectus forming a part thereof, any amendment to an Exchange
Offer Registration Statement or amendment or supplement to such Prospectus,
provide copies of such document to the Initial Purchasers and to counsel to the
Holders of Registrable Securities and make such changes in any such document
prior to the filing thereof as the Initial Purchasers or counsel to the Holders
of Registrable Securities may reasonably request and, except as otherwise
required by applicable law, not file any such document in a form to which the
Initial Purchasers on behalf of the Holders of Registrable Securities and
counsel to the Holders of Registrable Securities shall not have previously been
advised and furnished a copy of or to which the Initial Purchasers on behalf of
the Holders of Registrable Securities or counsel to the Holders of Registrable
Securities shall reasonably object on or prior to the later of five business
days after receipt thereof or three business days prior to filing thereof, and
make the representatives of the Company and the Guarantors available for
discussion of such documents as shall be
19
reasonably requested by the Initial Purchasers; the Holders shall be deemed to
have reasonably objected to such filing only if such Exchange Offer Registration
Statement or amendment thereto or Prospectus or supplement thereto, as
applicable, as proposed to be filed, contains a material misstatement or
omission; and
(ii) in the case of a Shelf Registration, a reasonable time prior to
filing any Shelf Registration Statement, any Prospectus forming a part thereof,
any amendment to such Shelf Registration Statement or amendment or supplement to
such Prospectus, provide copies of such document to the Holders of Registrable
Securities, to the Initial Purchasers, to counsel to the Holders of Registrable
Securities and to the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any, make such changes in any such document prior to
the filing thereof as the Initial Purchasers, the counsel to the Holders of
Registrable Securities or the underwriter or underwriters reasonably request and
not file any such document in a form to which the Majority Holders, the Initial
Purchasers on behalf of the Holders of Registrable Securities, counsel to the
Holders of Registrable Securities or any underwriter shall not have previously
been advised and furnished a copy of or to which the Majority Holder, the
Initial Purchasers on behalf of the Holders of Registrable Securities, counsel
to the Holders of Registrable Securities or any underwriter shall reasonably
object on or prior to the later of five business days after receipt thereof or
three business days prior to filing thereof, and make the representatives of the
Company and the Guarantors available for discussion of such documents as shall
be reasonably requested by the Majority Holder, the Initial Purchasers on behalf
of the Holders of Registrable Securities, counsel to the Holders of Registrable
Securities or any underwriter.
(r) in the case of a Shelf Registration, use their best efforts to
cause all Registrable Securities to be listed on any securities exchange on
which similar debt securities issued by the Company are then listed if requested
by the Majority Holders, or if requested by the underwriter or underwriters of
an underwritten offering of Registrable Securities, if any;
(s) in the case of a Shelf Registration, use their best efforts to
cause the Registrable Securities to be rated by the appropriate rating agencies,
if so requested by the Majority Holders, or if requested by the underwriter or
underwriters of an underwritten offering of Registrable Securities, if any;
(t) otherwise use their best efforts to comply with all applicable
rules and regulations of the SEC and make available to their security holders,
as soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 thereunder;
20
(u) cooperate and assist in any filings required to be made with the
NASD and, in the case of a Shelf Registration, in the performance of any due
diligence investigation by any underwriter and its counsel (including any
"qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
(v) upon consummation of an Exchange Offer, obtain (i) a customary
opinion of counsel to the Company and the Guarantors addressed to the Trustee
for the benefit of all Holders of Registrable Securities participating in the
Exchange Offer or a Private Exchange, and which includes an opinion that (A)
each of the Company and the Guarantors has duly authorized, executed and
delivered the applicable Exchange Securities, Private Exchange Securities and
the related indenture and (B) each of the applicable Exchange Securities,
Private Exchange Securities and related indenture constitute legal, valid and
binding obligations of each of the Company and the Guarantors, enforceable
against each of the Company and the Guarantors in accordance with its respective
terms (with customary exceptions) and (ii) an officers' certificate containing
certifications substantially similar to those set forth in Section 5(c) of the
Purchase Agreement.
In the case of a Shelf Registration Statement, the Company and the
Guarantors may (as a condition to such Holder's participation in the Shelf
Registration) require each Holder of Registrable Securities to furnish to the
Company and the Guarantors such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in writing.
The Company may exclude from such registration the Registrable Securities of any
Holder who unreasonably fails to furnish such information within a reasonable
time after receiving such request. Each Holder as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company and the Guarantors of the happening
of any event or the discovery of any facts, each of the kind described in
Section 3(e)(ii)-(vii) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by the Company and the
Guarantors, such Holder will deliver to the Company and the Guarantors (at their
expense) all copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. If the
Company and
21
the Guarantors shall give any such notice to suspend the disposition of
Registrable Securities pursuant to a Shelf Registration Statement as a result of
the happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(ii)-(vii) hereof, the Company and the Guarantors shall
be deemed to have used their best efforts to keep the Shelf Registration
Statement effective during such period of suspension provided that the Company
and the Guarantors shall use their best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement to
the Shelf Registration Statement and shall extend the period during which the
Shelf Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the date of
the giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions.
In the event that the Company and the Guarantors fail to effect the
Exchange Offer or file any Shelf Registration Statement and maintain the
effectiveness of any Shelf Registration Statement as provided herein, the
Company and the Guarantors shall not file any Registration Statement with
respect to any securities (within the meaning of Section 2(1) of the 1933 Act)
of the Company and the Guarantors other than Registrable Securities.
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the underwriter or
underwriters and manager or managers that will manage such offering will be
selected by the Majority Holders of such Registrable Securities included in such
offering and shall be acceptable to the Company and the Guarantors. No Holder
of Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
4. Indemnification; Contribution.
-----------------------------
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter (any
such Person being an "Underwriter") and each Person, if any, who controls any
Holder or Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
22
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment or supplement thereto) pursuant to which
Exchange Securities or Registrable Securities were registered under the 1933
Act, including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
or arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 4(d)
below) any such settlement is effected with the written consent of the
Company and the Guarantors; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by any indemnified
party), reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above; provided, however, that this indemnity
agreement shall not apply to any loss, liability, claim, damage or expense
to the extent arising out of any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company and the Guarantors by the
Initial Purchasers, such Holder, such Participating Broker-Dealer or
Underwriter expressly for use in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto);
provided, further, that the Company will not be liable to any Initial
Purchaser, Holder (in its capacity as Holder), Participating Broker-Dealer
or Underwriter (or any person who controls such party within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act) with respect to
any such untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary Prospectus to the extent that the Company
shall sustain the burden of proving that any such loss, liability, claim,
damage or expense resulted from the fact that such
23
Initial Purchaser, Holder (in its capacity as Holder), Participating Broker-
Dealer or Underwriter, as the case may be, sold Securities to a Person to
whom such Initial Purchaser, Holder (in its capacity as Holder),
Participating Broker-Dealer or Underwriter, as the case may be, failed to
send or give, at or prior to the written confirmation of the sale of such
Securities a copy of the final Prospectus (as amended or supplemented) if
the Company has previously furnished copies thereof (sufficiently in advance
of the closing of such sale to allow for distribution of the final
Prospectus in a timely manner) to such Initial Purchaser, Holder (in its
capacity as Holder), Participating Broker-Dealer or Underwriter, as the case
may be, and the loss, liability, claim, damage or expense of such Initial
Purchaser, Holder (in its capacity as a Holder), Participating Broker-Dealer
or Underwriter, as the case may be, resulted solely from an untrue statement
or omission or alleged untrue statement or omission of a material fact
contained in or omitted from such preliminary Prospectus which was corrected
in the final Prospectus.
(b) Each Holder severally, but not jointly, agrees to indemnify and
hold harmless the Company, the Guarantors, the Initial Purchasers, each
Underwriter and the other selling Holders, and each of their respective
directors and officers, and each Person, if any, who controls the Company, the
Guarantors, the Initial Purchasers, any Underwriter or any other selling Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 4(a) hereof, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus included therein (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Company and the
Guarantors expressly for use in the Shelf Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto);
provided, however, that no such Holder shall be liable for any claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but failure so
to notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying party or parties be liable for the
24
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 4 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 4 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative fault of the Company and the Guarantors on the one hand and the
Holders and the Initial Purchasers each on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company and the Guarantors on the one hand and
the Holders and the Initial Purchasers each on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company and the
Guarantors, the Holders or the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
25
The Company, the Guarantors, the Holders and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this
Section 4 were determined by pro rata allocation (even if the Initial Purchasers
were treated as one entity and the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 4. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 4 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by it were offered exceeds the amount
of any damages which such Initial Purchaser has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who controls an
Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Initial Purchaser or Holder, and each director of the Company, and each Person,
if any, who controls the Company and each Guarantor, as the case may be, within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company and such Guarantor, as the
case may be. The Initial Purchasers' respective obligations to contribute
pursuant to this Section 4 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A to the
Purchase Agreement and not joint.
5. Miscellaneous.
-------------
5.1 Rule 144 and Rule 144A. For so long as the Company is subject to
----------------------
the reporting requirements of Section 13 or 15 of the 1934 Act, the Company and
the Guarantors covenant that they will file the reports required to be filed by
them under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules
and regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company and the Guarantors covenant that they
will upon the request of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
26
under the 1933 Act, (b) deliver such information to a prospective purchaser as
is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it
will take such further action as any Holder of Registrable Securities may
reasonably request in writing, and (c) take such further action that is
reasonable in the circumstances, in each case, to the extent required from time
to time to enable such Holder to sell its Registrable Securities without
registration under the 1933 Act within the limitation of the exemptions provided
by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time
to time, or (iii) any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the Company and the
Guarantors will deliver to such Holder a written statement as to whether it has
complied with such requirements.
5.2 No Inconsistent Agreements. The Company and the Guarantors have
--------------------------
not entered into and the Company and the Guarantors will not after the date of
this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with the rights granted to the holders of
the Company's and any Guarantor's other issued and outstanding securities under
any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Guarantors have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure.
5.4 Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(a) if to a Holder, at the most current address set forth on the records of the
Registrar under the Indenture or given by such Holder to the Company and the
Guarantors by means of a notice given in accordance with the provisions of this
Section 5.4, (b) if to an Initial Purchaser, at the most current addresses given
by such Initial Purchaser to the Company and the Guarantors by means of a notice
given in accordance with the provisions of this Section 5.4, which address
initially is the address set forth in the Purchase Agreement with respect to the
Initial Purchasers; and (c) if to the Company and the Guarantors, initially at
the Company's address set forth in the Purchase Agreement, and thereafter at
such other address of which notice is given in accordance with the provisions of
this Section 5.4.
27
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the benefit
---------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement and,
if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
5.6 Third Party Beneficiaries. The Initial Purchasers (even if the
-------------------------
Initial Purchasers are not Holders of Registrable Securities) shall be third
party beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, and shall have
the right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights hereunder.
5.7 Specific Enforcement. Without limiting the remedies available to
--------------------
the Initial Purchasers and the Holders, the Company and the Guarantors
acknowledge that any failure by the Company and Guarantors to comply with their
obligations under Sections 2.1 through 2.4 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it would not be possible to measure damages for
such injuries precisely and that, in the event of
28
any such failure, the Initial Purchasers or any Holder may obtain such relief as
may be required to specifically enforce the Company's and the Guarantor's
obligations under Sections 2.1 through 2.4 hereof; provided, however, with
respect to any failures by the Company and the Guarantors to comply with Section
2.1 or Section 2.2 hereof, such relief shall not be available to any Holder who
fails to make the required representations in Section 2.1 or 3(f) hereof, as
applicable.
5.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5.9 Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.11 Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE MAXIM GROUP, INC.
By: /s/ A.J. Nassar
----------------------------------------
Name: A.J. Nassar
Title: President and Chief Executive
Officer
IMAGE INDUSTRIES, INC.
By: /s/ H. Stanley Padgett
----------------------------------------
Name: H. Stanley Padgett
Title: President
KINNAIRD & FRANCKE INTERIORS, INC.
KINNAIRD & FRANCKE DRAPERY CO., INC.
FIRST QUALITY, INC.
STEVE PETERSON INTERIORS & ASSOCIATES, INC.
BAY AREA CARPETS, INC.
CARPET WORLD, INC.
RNA ENTERPRISES, INC.
DUBOSE CARPETS & FLOORS, INC.
RUGS N REMNANTS, INC.
CARPET GALLERY, INC. (GEORGIA)
LOSANTVILLE CARPET OUTLET, INC.
AMERICAN CARPETS & INTERIORS, INC.
CARPET COUNTRY, INC.
CARPETMAX OF NEW MEXICO, INC.
CARPETMAX ALABAMA CONTRACT, INC.
By: /s/ Herbert A. Biggers
----------------------------------------
Name: Herbert A. Biggers
Title: President
30
MAXIM RETAIL GROUP, INC.
By: /s/ Paul Renn
----------------------------------------
Name: Paul Renn
Title: President
INVESTOR MANAGEMENT, INC.
TRI-R OF ORLANDO, INC.
CARPETMAX OF PALM BEACH, INC.
CREDITMAX CORP.
CARPETMAX OF CHARLOTTE, INC.
CLOUD CARPETS, INC.
MAXIM EQUIPMENT LEASING
COMPANY, INC.
By: /s/ A.J. Nassar
----------------------------------------
Name: A.J. Nassar
Title: President
GCO, INC.
GCO CARPET OUTLET, INC.
BAILEY & ROBERTS CARPETMAX
OF TENNESSEE, INC.
By: /s/ A.J. Nassar
----------------------------------------
Name: A.J. Nassar
Title: Chief Executive Officer
31
CARPETMAX, L.P.
By: The Maxim Group, Inc., as General Partner
By: /s/ A.J. Nassar
----------------------------------------
Name: A.J. Nassar
Title: President and Chief Executive
Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
FIRST UNION CAPITAL MARKETS CORP.
WHEAT, FIRST SECURITIES, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Bennett Rosenthal
---------------------------------------
Authorized Signatory
32
RICHARD G. GREENSTEIN
(404) 264-2623
E-MAIL: RGREENSTEIN@SGRATL.COM
_______________, 1997
Merrill Lynch, Pierce, Fenner & Smith Incorporated
First Union Capital Markets Corp.
Wheat, First Securities, Inc.
c/o Merrill Lynch Pierce Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have acted as counsel for The Maxim Group, Inc. (the "Company"), a
Delaware corporation, and its subsidiaries (as "Guarantors" as defined in the
Registration Rights Agreement) in connection with the issuance and sale by the
Company of $100,000,000 principal amount of its 9 1/4% Senior Subordinated
Notes, due 2007, pursuant to and in accordance with the terms of a Purchase
Agreement dated as of October 9, 1997 (the "Purchase Agreement") entered into
among the Company, the Guarantors and the Initial Purchasers named therein and
the filing by the Company and the Guarantors of an Exchange Offer Registration
Statement (the "Registration Statement") in connection with an exchange offer to
be effected pursuant to the Registration Rights Agreement dated as of October
16, 1997 (the "Registration Rights Agreement") entered into among the Company,
the Guarantors and the Initial Purchasers. The opinions which follow are
rendered to you at the request of the Company and the Guarantors and in
accordance with Section 3(f)(B) of the Registration Rights Agreement. Terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Registration Rights Agreement.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering this opinion, as to
all matters of fact relevant to this opinion, we have assumed the completeness
and accuracy of, and are relying solely upon, the representations and warranties
of the Company and the Guarantors set forth in the Purchase Agreement and the
statements set forth in certificates of public officials and officers of the
Company and the Guarantors, without making any independent investigation or
inquiry with respect to the completeness or accuracy of such representations,
warranties or statements, other than a review of the certificate of
incorporation, by-laws and relevant minute books of the Company and the
Guarantors.
Our opinions herein are limited to the federal laws of the United States of
America, the laws of the State of Georgia and the Corporation Law of the State
of Delaware, as currently in effect, and we express no opinion with respect to
the laws of any other jurisdiction.
33
Merrill Lynch, Pierce, Fenner & Smith Incorporated
First Union Capital Markets Corp.
Wheat, First Securities, Inc.
___________________, 1997
Page 2
Based on and subject to the foregoing, we are of the opinion that the
Exchange Offer Registration Statement and the Prospectus (other than the
financial statements, notes or schedules thereto and such other financial and
statistical data and supplemental schedules as are included or incorporated by
reference therein, and the Form T-1, as to all of which we express no opinion),
comply as to form in all material respects with the requirements of the 1933 Act
and the applicable rules and regulations promulgated under the 1933 Act.
The limitations inherent in the independent verification of factual matters
and the character of determinations involved in the offering process are such
that we have not verified and are not passing upon and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus.
However, we advise you that we have participated in conferences with
officers and other representatives of the Company, representatives of the
Company's independent certified public accountants, and your representatives, at
which conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed. Although we do not pass upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus, we
confirm that, on the basis of the foregoing, no facts have come to our attention
which lead us to believe that the Registration Statement or any amendment
thereto (as of the time it became effective under the 1933 Act) or the
Prospectus or any supplement thereto (as of the time of issuance) contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that the Prospectus, as amended or supplemented at the Closing Time,
contained or contains an untrue statement of material fact or omitted or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, provided that in each case, we make no statement herein
with respect to the financial statements and notes and supporting schedules
thereto, or other statistical data derived from the financial statements and
notes and supporting schedules thereto, contained or required to be contained in
the Registration Statement and Prospectus.
The opinions set forth herein are delivered to you solely for your benefit
and for the benefit of your counsel in connection with the transactions
contemplated by the Registration Rights Agreement, and may not be relied upon by
any other persons or utilized in connection with any other transaction or
transactions, other than those contemplated by the Registration Rights
Agreement, except with the express permission of this firm.
Very truly yours,
SMITH, GAMBRELL & RUSSELL, LLP
34
Merrill Lynch, Pierce, Fenner & Smith Incorporated
First Union Capital Markets Corp.
Wheat, First Securities, Inc.
___________________, 1997
Page 3
Richard G. Greenstein
RGG:tlj[corpbh 108588]
35