EXHIBIT 2.2
FIRST AMENDMENT
TO
STOCK PURCHASE AGREEMENT
This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT, dated as of this 28th
day of November, 2003 (the "Effective Date"), is entered into by and between
SEARS, XXXXXXX AND CO., a New York corporation ("Seller"), and TBC CORPORATION,
a Delaware corporation ("Buyer").
WHEREAS, Seller and Buyer entered into a Stock Purchase Agreement dated
as of September 21, 2003 (the "Purchase Agreement"); and
WHEREAS, the parties now wish to amend the terms and conditions of the
Purchase Agreement.
NOW, THEREFORE, the parties do hereby amend the terms and conditions of
the Purchase Agreement as follows:
1. Definitions.
A. Section 1.1 of the Purchase Agreement is amended by adding or
amending the following words and terms with the following definitions:
"Base Working Capital" means the Net Working Capital as of the Balance
Sheet Date, as indicated on Schedule WC, said amount being
$(6,624,000).
"Bond" has the meaning specified in Section 11.17.
"Closing Date Purchase Price" means the Base Price.
"Xxxxxx Letter of Credit" has the meaning specified in Section 11.17.
"PANASIA Letter of Credit" has the meaning specified in Section 11.17.
"PANASIA Replacement Letter of Credit" has the meaning specified in
Section 11.17.
"Replacement Bond" has the meaning specified in Section 11.17.
"Replacement Letter of Credit" has the meaning specified in Section
11.17.
"SRAC" has the meaning specified in Section 11.17.
B. Section 1.1 of the Purchase Agreement is further amended by
deleting the following word and terms and their respective definitions:
"Estimated Closing Net Working Capital"
"Estimated Net Working Capital Adjustment Amount"
2. Net Working Capital Estimate.
Section 2.1(b) of the Purchase Agreement shall be replaced as follows:
In consideration of the transfer of the Shares pursuant to Section
2.1(a), and as payment for the Shares, Buyer shall pay and deliver to Seller an
aggregate of (i) $225,000,000 (the "Base Price"), plus (if positive) or minus
(if negative) (ii) the Net Working Capital Adjustment Amount determined in
accordance with Section 2.4 (the "Purchase Price"). The parties acknowledge that
the Net Working Capital Adjustment Amount will not be determinable until after
Closing. Accordingly, after the Closing, the parties will determine the Net
Working Capital Adjustment Amount and make such further payments (if any) as
provided in Section 2.4. The Base Price shall be paid by Buyer to Seller by wire
transfer of immediately available funds to such account as Seller shall
designate in writing.
Section 2.3 of the Purchase Agreement is amended by deleting the
reference to "Closing Date Purchase Price" and replacing it with "Base Price".
Section 2.4 of the Purchase Agreement is amended by deleting the text
of Section 2.4(a) and inserting "[Intentionally Omitted]" and Sections 2.4(c)
and 2.4(d) shall be replaced as follows:
(c) Disputes. If Buyer disagrees with the calculation of the
Closing Net Working Capital or any element of the Closing Balance Sheet, it
shall notify Seller of such disagreement in writing within sixty (60) days after
its receipt of the Closing Balance Sheet. If Buyer does not provide such a
notice of disagreement within such sixty (60) day period, Buyer shall be deemed
to have accepted the Closing Balance Sheet and the calculation of the Closing
Net Working Capital delivered by Seller, which shall be final, binding and
conclusive for all purposes under this Agreement. In the event any such notice
of disagreement is timely provided by Buyer, Seller and Buyer shall use
reasonable efforts for a period of ninety (90) days (or such longer period as
they may mutually agree) to resolve such disagreements. If, at the end of such
ninety (90) day period, Seller and Buyer are unable to resolve such
disagreements, then Ernst & Young LLP (or such other independent accounting firm
of recognized national standing as may be mutually selected by Seller and Buyer)
(the "Accountants") shall resolve any remaining disagreements. The Accountants
shall act as an expert and not as an arbitrator and shall resolve the matters
still in dispute and adjust and establish any disputed amount or final Purchase
Price to reflect such resolution. If issues in dispute are submitted to the
Accountants for resolution, each party shall furnish to the Accountants such
workpapers and other documents and information relating to the disputed issues
as the Accountants may reasonably request and are available to that party (or
its independent public accountants) and will be afforded the reasonable
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants. The
Accountants shall determine as promptly as practicable, but in any event within
forty-five (45) days after the date on which the disputed issues (if any) are
referred to the Accountants, based solely upon such Accountant's expertise and
the
written submissions forwarded by Buyer and Seller to the Accountants, whether
and to what extent (if any) the Closing Balance Sheet or the Closing Net Working
Capital determination requires adjustment based on the disputed issues submitted
to the Accountants. Buyer and Seller shall be responsible for the fees and
expenses of the Accountants as follows: (i) if the Accountants determine that
the net adjustment to the Closing Balance Sheet or the Closing Net Working
Capital in respect of all disputed issues submitted to the Accountants favors
either Buyer or Seller and the amount of such adjustment does not exceed
$1,000,000, then Buyer and Seller shall each bear one-half of all of the fees
and expenses of the Accountants; (ii) if the Accountants determine that the net
adjustment to the Closing Balance Sheet or the Closing Net Working Capital in
respect of all disputed issues submitted to the Accountants favors Seller and
the amount of such adjustment exceeds $1,000,000, then Buyer shall be
responsible for all of the fees and expenses of the Accountants; and (iii) if
the Accountants determine that the net adjustment to the Closing Balance Sheet
or the Closing Net Working Capital in respect of all disputed issues submitted
to the Accountants favors Buyer and the amount of such adjustment exceeds
$1,000,000, then Seller shall be responsible for all of the fees and expenses of
the Accountants. The determination of the Accountants shall be final, conclusive
and binding on the parties. The date on which the Closing Net Working Capital is
finally determined in accordance with this Section 2.4(c) is referred as to the
"Determination Date."
(d) Payment. The "Net Working Capital Adjustment Amount," which
may be positive or negative, shall mean (i) the Closing Net Working Capital
minus (ii) the Base Working Capital. If the Net Working Capital Adjustment
Amount is greater than the Base Working Capital (such difference, the "Increase
Amount"), then within five (5) days after the Determination Date, Buyer shall
pay to Seller (by wire transfer of immediately available funds to such account
as Seller may designate in writing) an additional amount equal to the Increase
Amount, together with interest thereon calculated from the Closing Date to the
date of payment at the prime rate of interest as announced by Citibank, N.A. in
New York on the Closing Date (the "Applicable Rate"). If the Net Working Capital
Adjustment Amount is less than the Base Working Capital (such difference, the
"Deficit Amount"), then the amount payable by Buyer to Seller pursuant to
Section 2.5 shall be reduced by an amount equal to the Deficit Amount, together
with interest thereon at the Applicable Rate calculated from the Closing Date to
the earlier of (i) the date on which Buyer makes the payment contemplated by
Section 2.5 or (ii) the date that is five (5) days after the Determination Date.
3. Inventory.
Section 2.5 of the Purchase Agreement is amended by replacing the
entire section with the following:
Payment of Payable with Respect to Closing Date Inventory. On March 26,
2004, Buyer shall pay to Seller (by wire transfer of immediately available funds
to such account as Seller may designate in writing) an amount, without interest,
equal to the lesser of (a) the amount of inventory reflected on the Closing
Balance Sheet and included in the Closing Net Working Capital; it being
understood that such payment shall satisfy in full the corresponding payable
related to the amount of inventory reflected on the Closing
Balance Sheet and included in the Closing Net Working Capital; or (b) if, and
only if, the provisions of Section 2.4(c) have been invoked by Buyer as to the
dollar amount of inventory as an element of the Closing Balance Sheet, the
amount of inventory as calculated by Buyer in good faith and submitted by Buyer
to the Accountants. Any amount determined under Section 2.4(c) to be due shall
be paid pursuant to Section 2.4(d).
4. Representations and Warranties.
Section 3.13(c) of the Purchase Agreement is amended by replacing the
entire section with the following:
(c) Seller, one of its Affiliates or the Company presently
operates an NTB Store at each location included in the Owned Real Property and
the Leased Real Property, except for the NTB Store identified as Sears Unit No.
7299.
5. Covenants.
Section 5.4(b)(x) of the Purchase Agreement is amended by replacing the
entire section with the following:
(x) open any new NTB Store or close, other than with respect to
the NTB Store identified as Sears Unit No. 7299, any existing NTB Store;
6. Employee Matters.
A. Section 5.6(d) of the Purchase Agreement is amended by adding
the following sentence after the first sentence thereof:
Notwithstanding the foregoing, the termination of a full time Business
Employee within the one-year period beginning with the Closing shall
not violate the preceding sentence if such Business Employee is
terminated by Buyer solely on account of an annual seasonal layoff by
Buyer of not more than 10% of the employees within each unit, provided
that such annual seasonal layoff occurs in the month of January 2004
and in the normal course of Buyer's business and is consistent with
Seller's past practice of annual seasonal layoffs with respect to the
Business.
B. Schedule 5.6(b) of the Disclosure Schedule to the Purchase
Agreement is amended by adding the following sentence at the end of item 4
thereof:
Notwithstanding the foregoing, Buyer shall not be required to make
severance payments to Business Employees who are terminated by Buyer
solely on account of an annual seasonal layoff by Buyer of not more
than 10% of the employees within each unit, provided that such annual
seasonal layoff occurs in the month of January 2004 and in the normal
course of Buyer's business and is consistent with Seller's past
practice of annual seasonal layoffs with respect to the Business.
7. Letter of Credit.
A. The Purchase Agreement shall be amended by adding the
following Section 11.17:
11.17 Letters of Credit and Performance Bond.
(a) Sears Xxxxxxx Acceptance Corp. ("SRAC"), an Affiliate of Seller,
has established an irrevocable letter of credit, dated January 2, 1997, for the
benefit of Xxxxxx, Ltd., at the request of the Company (the "Xxxxxx Letter of
Credit"), to secure the Company's performance under the Leases specified in the
Xxxxxx Letter of Credit. Buyer agrees to use reasonable best efforts, commencing
promptly after the Closing Date, to cause, with respect to the aggregate Per
Lease Stated Amount attributable to leases under the Xxxxxx Letter of Credit
that constitute Leased Real Property, (i) the Xxxxxx Letter of Credit to be
cancelled or (ii) a replacement letter of credit (the "Replacement Letter of
Credit"), established by the Buyer, one of its Affiliates or a lender of Buyer
or one of its Affiliates for the benefit of Xxxxxx, Ltd. or its successors and
assigns, to be substituted for that portion of the Xxxxxx Letter of Credit that
covers Leased Real Property. Buyer acknowledges that, as of and following the
Closing, if any amounts are paid by SRAC under the Xxxxxx Letter of Credit
relating to the Leased Real Property for periods after the Closing Date, then
notwithstanding anything to the contrary herein including Section 6.6 hereof,
SRAC, as a Seller Indemnified Party, shall be entitled to indemnification by
Buyer pursuant to Section 9.3 hereof with respect to all amounts paid by SRAC
under the Xxxxxx Letter of Credit;
(b) Seller has established a (i) letter of credit at PANASIA BANK (the
"PANASIA Letter of Credit"), and (ii) performance bond #5916733 (the "Bond")
relating to the construction of NTB Store #7180 in Lawrenceville, New Jersey.
Buyer agrees to use reasonable best efforts, commencing promptly after the
Closing Date, to cause (i) the PANASIA Letter of Credit and the Bond to be
cancelled or (ii) a replacement letter of credit (the "PANASIA Replacement
Letter of Credit"), established by the Buyer, one of its Affiliates or a lender
of Buyer or one of its Affiliates for the benefit of Seller or its successors
and assigns, and a replacement bond (the "Replacement Bond") to be substituted
for the Bond.
8. Miscellaneous.
A. All capitalized terms not otherwise defined in this Agreement
shall have the meanings ascribed to them in the Purchase Agreement.
B. To the extent this Agreement contradicts any provisions of the
Purchase Agreement, the provisions of this Agreement shall control.
C. Except as amended by this Agreement, all of the terms and
conditions of the Purchase Agreement shall continue in full force and effect.
* * * *
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed as of the day and year first above written.
SEARS, XXXXXXX AND CO.
By: /s/ X. Xxxxxxx Will
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Name: X. Xxxxxxx Will
Title: Vice President Business Development
TBC CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
