Exhibit 99.2
THE MAXIM GROUP, INC.
000 XxxxXxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
August 9, 1998
Xxxx Industries, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Chairman
Re: Agreement and Plan of Merger, dated June 23, 1998 (the "Merger
Agreement"), among Xxxx Industries, Inc., Xxxx Carpet Showplace, Inc.,
CMAX Acquisition, Inc. and The Maxim Group, Inc.
Ladies and Gentlemen:
This letter will serve as an amendment and modification by the Company,
Targetl, the Subsidiary and Parent to the Merger Agreement. From and after the
date hereof, the Merger Agreement shall be deemed to mean the Merger Agreement,
as amended hereby. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
A. The parties hereto hereby agree to amend and modify the Merger Agreement
as follows:
1. Section 2.1 of Article II of the Merger Agreement is hereby amended by
deleting therefrom the phrase "the Subsidiary" and inserting in lieu thereof the
phrase "Target1".
2. Section 3.2(b)(i) of Article III of the Merger Agreement is hereby
amended by deleting therefrom the reference to the phrase "Target3".
3. Section 3.2(b)(ii) of Article III of the Merger Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof:
(ii) (A) Within thirty (30) days after the Closing Date, the Company
shall deliver to Parent a final balance sheet related to the retail
stores listed on Schedule 6.13, which final balance sheet (x) shall
reflect the net book value of the consolidated assets and Accrued
Liabilities (as hereinafter defined) of Target as of the Effective
Time in accordance with generally accepted accounting principles
consistently applied ("GAAP") following the transfers contemplated by
Section 6.13 hereof and (y) shall be in substantially the same form as
the Opening Balance Sheet (the "Closing Balance Sheet"). Parent and
its representatives may participate in the preparation of the Closing
Balance Sheet.
Xxxx Industries, Inc.
August 9, 1998
Page 2
(B) As soon as practicable after the Closing Date and in any event
within sixty (60) days thereafter, the Company shall cause Xxxxxx
Xxxxxxxx LLP, the independent public accountants of the Company, to
review the Closing Balance Sheet pursuant to the procedures set forth
in the engagement letter, dated July 22, 1998, from Xxxxxx Xxxxxxxx
LLP to, and accepted by, the Company and Parent, with such changes to
such procedures (i) as may be approved by Company and Parent from time
to time, or (ii) as may be separately requested by either of Company
or Parent, provided, that in the event either Company or Parent
separately requests changes to such procedures and such changes are
not approved by the other party then the additional costs incurred as
a result of such request, if any, shall be the sole responsibility of
the requesting party (the "Engagement Letter"); provided, however,
that the net book value of goodwill shall be valued for all purposes
under this Agreement at the value reflected in the Opening Balance
Sheet. Any adjustments made by Xxxxxx Xxxxxxxx LLP following its
review of the Closing Balance Sheet pursuant to the procedures set
forth in the Engagement Letter shall be set forth in a report provided
to each of the Company and Parent (the Closing Balance Sheet as
adjusted by such report being hereinafter referred to as the
"Post-Closing Report"). The Post-Closing Report shall be submitted to
each of Parent and the Company for their approval, which shall not be
unreasonably withheld, within 20 days following submission by the
accountants. Other than as provided above, Parent and the Company
shall each bear one-half of the costs incurred in connection with the
preparation of the Post-Closing Report and each of Parent and Company
shall bear their respective expenses incurred in connection with their
review of the Post-Closing Report.
4. Section 3.2(b) of Article III of the Merger Agreement is hereby further
amended by adding the following new subsection (v) thereto:
(v) The Company hereby agrees that Parent and Target shall bear no
responsibility for liabilities that do not relate to the operation of
the retail stores listed on Schedule 6.13, and Company will
immediately reimburse Parent and/or Target, as the case may be, for
any of such liabilities that are paid by Parent and/or Target after
the Effective Time. The Company and Parent hereby further agree that
those certain liabilities described on Exhibit "D" that relate to the
operation of the retail stores listed on Schedule 6.13 will be accrued
on the Closing Balance Sheet in accordance with GAAP (the "Accrued
Liabilities"), and the same will be subject to adjustment pursuant to
Xxxx Industries, Inc.
August 9, 1998
Page 3
the Post-Closing Report (such Accrued Liabilities, as so adjusted
being hereinafter referred to as the "Final Accrued Liabilities").
Parent agrees to pay, or to cause Target to pay, all of the payables
relating to the operation of the retail stores listed on Schedule
6.13; provided, that the Company hereby agrees to reimburse Parent
and/or Target, as the case may be, immediately for any and all
payables that relate to the operation of the retail stores listed on
Schedule 6.13 prior to the Closing Date (the "Pre-Closing Payables"),
except for the Final Accrued Liabilities, for which no reimbursement
will be owed unless the Parent's or Target's payment exceeds the
amount reserved in the Closing Balance Sheet, as adjusted pursuant to
the Post-Closing Report, in which event Company will reimburse Parent
and/or Target, as the case may be, immediately for any payments made
in excess of such reserve. If and to the extent that trade payable
invoices rendered by third party vendors include Pre-Closing Payables
and non-Pre-Closing Payables, the same shall be appropriately
segregated by the Company and Parent. Utility bills and similar
expenses that cannot be readily segregated shall be prorated on a per
diem basis with the Pre-Closing Payables to include the prorated share
that is allocated to periods that are prior to the Closing Date.
5. Section 4.1(a) of Article IV of the Merger Agreement is hereby amended
by deleting therefrom the reference to the phrase and parenthetical "Xxxx Retail
Properties, Inc. ("Target3")."
6. Section 4.1(a) of Article IV of the Merger Agreement is hereby further
amended by deleting therefrom any and all references to the phrase "Target3."
7. Section 4.1(e) of Article IV of the Merger Agreement is hereby amended
by deleting subsection (iii) thereof in its entirety and inserting the following
in lieu thereof. "(iii) [Intentionally Reserved]."
8. Section 6.10 of Article VI of the Merger Agreement is hereby amended by
deleting therefrom both references to the word "Administrative" and inserting in
lieu thereof the word "Transition".
9. Section 7.4(b) of Article VII of the Merger Agreement is hereby amended
by deleting therefrom the reference to "Indemnitor" appearing in the second line
thereof and inserting in lieu thereof a reference to "Indemnitee".
10. The Merger Agreement is hereby amended by adding thereto a new Exhibit
"D", which Exhibit "D" shall be in the form attached hereto.
Xxxx Industries, Inc.
August 9, 1998
Page 4
11. Section 7.2 of Article VII of the Merger Agreement is hereby amended by
(i) deleting the period at the end of subsection (e) and substituting a
semicolon followed by the term "or" in lieu thereof, and (ii) adding the
following new subsection (f) to the end thereof:
(f) Any litigation matters disclosed in Schedule 4.9 of the Merger
Agreement or any litigation pending or threatened against the Company, a
Target, a predecessor in interest or any of their respective affiliates at
or prior to the Effective Time whether or not disclosed to Parent at or
prior to Closing arising out of events occurring before the Effective Time.
12. Section 7.7 of Article VII of the Merger Agreement is hereby amended by
adding the term "or Section 7.2(f)" (i) to the end of subsection (a) of Section
7.7, and (ii) immediately after the reference to Section 7.2(b) appearing in
subsection (c) of Section 7.7.
13. The Schedules to the Merger Agreement are hereby amended by deleting
therefrom Schedule 6.13 in its entirety and inserting in lieu thereof the
replacement Schedule 6.13 attached hereto.
B. The Company agrees that it will provide, at the request of Parent or any
other Indemnitee, an assurance letter to third parties, in form and substance
reasonably acceptable to such third parties, indicating that such litigation
matters (or any future litigation matters for which the Company is providing
indemnification under Article VII of the Merger Agreement) are not in any way
the responsibility or liability of Parent or any other Indemnitee and are the
sole responsibility of the Company.
C. The Company hereby represents and warrants to Parent that all the
transfers contemplated by Section 6.13 of the Merger Agreement are complete and
all liabilities of Target, other than liabilities related to the operation of
the retail stores listed on Schedule 6.13 specifically assumed by Parent
pursuant to the Merger Agreement, have been transferred from Target to the
Company or another entity controlled by the Company.
Please evidence your acceptance of and agreement to the above-listed
amendments by executing this letter agreement in the space provided for below.
Xxxx Industries, Inc.
August 9, 1998
Page 5
By signing below, each party hereto represents and warrants that all
representations, warranties, covenants and agreements made by such party in the
Merger Agreement are true, correct and accurate as of the date hereof and that
each such party remains bound thereby.
Sincerely,
THE MAXIM GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx, Executive
Vice President - Finance
Agreed to and accepted this 9th
day of August, 1998:
CMAX ACQUISITION, INC. XXXX CARPET SHOWPLACE, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
--------------------- -----------------------
Xxxxxx X. Xxxxxx, Vice President Xxxxxx X. Xxxxxxxx, Vice
and Treasurer President and Secretary
XXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxx, Vice President
and Secretary
::ODMA\PCDOCS\ATL\236393\1
EXHIBIT "D"
Liabilities Accrued on the Closing Balance Sheet:
1. Customer Deposits
2. Installer Retainage Accrual
3. Installer Bonus Accrual
4. Vacation/Personal Days Accrual
5. Real Estate/Personal Property Accruals
6. Employee Bonus Accruals
7. Combined Liabilities for the Carpet Exchange, Xxxxx Brothers, Carpet Factory
Outlet, Carpet Center, as follows:
(a) Notes Payable
(b) Long Term Debt
(c) Accrued Payables
(d) Accrued Salaries and Wages
(e) Accrued Income Taxes
Schedule 6.13
LIST OF RETAIL STORES
1. Target2 and Target4 will become wholly-owned subsidiaries of Targetl.
2. The retail stores to be owned by Target at the Effective Time of the
Merger (the "Merger Stores") are as follows:
a. The stores listed on the Schedules of Leases attached hereto
(except for the Iowa City store if it is transferred as
described in Schedule 4.7(g) to the Merger Agreement).
b. The store listed on the schedule of Owned Property included on
Schedule 4.11(c) to the Merger Agreement.
3. Unless otherwise contemplated by the Agreement, to the extent that
assets and liabilities not related to the Merger Stores are currently
in Target, such assets and liabilities will be transferred out of
Target.
4. Except for the assets set forth on Schedule 4.2.1(a) to the Merger
Agreement and unless otherwise contemplated by the Merger Agreement, to
the extent that storebased assets and liabilities of Merger Stores are
not currently in Target, they will be transferred into Target.
::ODMA\PCDOCS\ATL\236393\1
