Amendment Number One
To
Stock Purchase Agreement
This Amendment Number One (this "Amendment") is made as of the 17th day
of November, 1995, between The TJX Companies, Inc., a Delaware corporation
(the "Buyer"), and Melville Corporation, a New York corporation (the
"Seller"), to the Stock Purchase Agreement between Buyer and Seller dated as
of October 14, 1995 (the "Stock Purchase Agreement").
Recitals
1. Seller and Buyer desire to amend certain provisions of the Stock
Purchase Agreement and to add certain additional provisions to the Stock
Purchase Agreement, all as set forth below.
2. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms as set forth in the Stock Purchase
Agreement.
Agreement
Therefore, in consideration of the foregoing and the mutual agreements
and covenants set forth below and in the Stock Purchase Agreement, the parties
hereto hereby agree as follows:
1. Amendment.
1.1. Section 3.4.
1.1.1. Section 3.4(a) of the Stock Purchase Agreement is hereby
amended and restated in its entirety as follows:
"As promptly as possible following the Closing Date, the Company
shall prepare a consolidated balance sheet of the Company and its
Subsidiaries as of a time immediately prior to the Closing (the
"Closing Balance Sheet") in accordance with generally accepted
accounting principles applied consistently with the Company's past
practices used in the preparation of the Annual Financials, except
that inventory will be determined using the first-in first-out
inventory cost method and without regard to the Company's adoption
of Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," and the change in the Company's accounting policy
with respect to the capitalization of internally developed
software (the "Accounting Policy Changes"). The inventory
reflected on the Closing Balance Sheet shall include all
merchandise inventory recorded in the Company's books and records
calculated in accordance with generally accepted accounting
principles consistently applied by the Company, utilizing the
retail method for the store inventory and the cost method for the
warehouse and distribution centers as consistently applied by the
Company in preparation of the Annual Financials, except inventory
cost will be determined using the first-in first-out inventory
method. Amounts reflected on the Closing Balance Sheet for those
elements, accounts or items to be included in the calculation of
Company Net Assets shall include all known and estimated assets
and liabilities as of the Closing Date consistent with the
Company's fiscal year-end cutoff procedures.
Coopers & Lybrand, L.L.P. ("Coopers") shall perform
procedures agreed upon by the parties and Coopers (as set forth in
Appendix B to Schedule 3.4B, but as modified by Appendix C to
Schedule 3.4B with respect to certain inventory matters) in
connection with the elements, accounts or items of the Closing
Balance Sheet that are to be included in the calculation of
Company Net Assets for the purposes of issuing a report (the
"Coopers Report") thereon detailing the results of such procedures
as applied by Coopers in accordance with standards established by
the American Institute of Certified Public Accountants (and prior
to the issuance by Coopers of such report, KPMG Peat Marwick and
representatives of the Seller and the Company reasonably
designated by the Seller shall have the opportunity to review
Coopers' work papers and to be present during the performance of
all such procedures and the procedures described in Appendix C to
Schedule 3.4B). Adjustments proposed by Coopers to the elements,
accounts or items of the Closing Balance Sheet to be included in
the calculation of Company Net Assets will be aggregated and to
the extent the total of such adjustments exceeds $750,000 (the
"Adjustment Basket") on a net basis, such excess adjustments shall
be reflected in the Closing Balance Sheet for the purpose of
calculating Company Net Assets (it being understood that the
Shrink Adjustment shall not be included in the Adjustment Basket,
but rather that in calculating the amount of Company Net Assets
the Shrink Adjustment shall be made on a dollar-for-dollar basis
in accordance with the next succeeding paragraph and Schedule
3.4A). Coopers shall furnish the Coopers Report to the Seller and
Buyer as soon as reasonably practicable, but in any event not
later than the date of delivery of the Company Net Assets
Statement.
Between the Closing Date and February 10, 1996, all inventory
will be physically counted and a shrink adjustment calculated in
accordance with the Warehouse Inventory Procedures and the Store
Inventory Procedures described in Appendix C to Schedule 3.4B (the
"Shrink Adjustment"). In calculating Company Net Assets, the
inventory value reflected on the Closing Balance Sheet shall be
adjusted by the amount of the Shrink Adjustment. Buyer, Seller
and their respective accountants shall have the opportunity to
observe the physical count of the inventory.
As soon as reasonably practicable after completion of the
physical inventories and calculation of the Shrink Adjustment,
Coopers shall prepare and deliver a Company Net Assets Statement in
substantially the form of Schedule 3.4A, which will include a
calculation of the Cash Purchase Price in the form of Appendix A
thereto. Assets and liabilities on the Company Net Assets
Statement will be equal to such items in the Closing Balance Sheet
except as otherwise specified in Schedule 3.4A and will exclude
the impact of the Accounting Policy Changes and will reflect
property on the gross cost basis. The Company Net Assets
Statement will exclude those assets and liabilities detailed in
Schedule 3.4B, including Appendix A thereto, under the columns
titled "Items to be Assumed/Retained by Seller" and "Other
Adjustments." "Company Net Assets" shall mean the net asset
figure appearing on the Company Net Assets Statement.
Schedule 3.4B sets forth Company Net Assets as set forth on
an estimated basis as of October 30, 1995. The "Target Net Asset
Amount" shall mean $968,372,000 (which amount equals the net asset
figure shown under the column styled "Estimated Statement of Net
Assets" on said Schedule 3.4B)."
Buyer shall cause the Company and its Subsidiaries to
maintain through January 31, 1996 the shortage component of the
field and store management incentive program of the Company and
its Subsidiaries as in effect prior to Closing.
1.1.2. The Notes to Schedule 3.4A to the Stock Purchase Agreement
are hereby amended by adding the following:
"8) Merchandise inventories, FIFO - Balance is taken from the
Closing Balance Sheet adjusted by the Shrink Adjustment."
1.1.3. There is hereby added a new Appendix C to Schedule 3.4B to
the Stock Purchase Agreement in the form of such Appendix C attached to
this Amendment.
1.1.4. Note 2 to Schedule 3.4A to the Stock Purchase Agreement is
hereby amended and restated in its entirety as follows:
"2) Cash - Balance represents change funds in each open store
plus all petty cash funds."
1.1.5. The second sentence of Note 1 to Schedule 3.4B is hereby
amended by deleting the words "home office" and substituting therefor
the word "all."
1.2. Section 4.1.7. Section 4.1.7 of the Stock Purchase Agreement is
hereby amended by deleting the first two sentences therefrom and substituting
therefor the following sentence:
"Except as set forth on Schedule 4.1.7, the Company has no
Subsidiaries."
Schedule 4.1.7 attached to the Stock Purchase Agreement is hereby
deleted in its entirety and replaced by Schedule 4.1.7 attached to this
Amendment.
1.3. Section 6.14 and Section 6.18. The following stores shall be
deemed to be included under the caption "Permitted Future Store Locations" on
the Section 6.l4 Letter and designated as a Seller Store under the caption
"Open Store Schedule" on the Store Schedule:
#697 Fresno, CA
#695 Chicago (6 Corners), IL
#034 E. Islip, N.Y
1.4. Section 9.5. Schedule 9.5 and Schedule 9.5A attached to the Stock
Purchase Agreement are hereby deleted in their entirety and replaced by
Schedule 9.5 and Schedule 9.5A attached to this Amendment.
1.5. New Section 14. There is hereby added to the Stock Purchase
Agreement the following new Section 14:
"14. ADDITIONAL PROVISIONS.
14.1. Selden, New York Store (Marshalls No. 454). In order to
confirm the continuation of an existing arrangement involving Bob's of
Selden, NY, Inc. ("Bob's-Selden") and the Company, Seller agrees to
cause Bob's-Selden to enter into an agreement (the "Bob's-Selden
Agreement") to pay to Buyer on the first day of each calendar month
beginning with December, 1995 through and including December, 2018, in
immediately available funds, the amount set forth below during the
respective periods set forth below:
Period Monthly Payment
12/1/95 - 12/31/98 $10,989.08
1/1/99 - 3/31/2000 $19,844.33
4/1/2000 - 12/31/2003 $19,398.25
1/1/2004 - 12/31/2008 $20,685.50
1/1/2009 - 3/31/2010 $21,972.83
4/1/2010 - 12/31/2013 $21,377.42
1/1/2014 - 12/31/2018 $22,664.67
; provided, however, that such payment obligations shall terminate upon
termination of the lease of the retail store currently leased by
Bob's-Selden to which such payment obligations relate. Any amount not
paid on the specified date shall bear interest at the rate of 10% per
annum. Seller shall cause Bob's, Inc. to provide a guarantee of the
foregoing payment obligations (the "Bob's Parent Guarantee). Seller
shall provide Buyer with executed original copies of the Bob's-Selden
Agreement and the Bob's Parent Guarantee within 30 days following the
Closing.
14.2. Marshalls of Honolulu, HI, Inc. Radius Restriction.
Reference is hereby made to that certain Lease between Victoria Ward,
Limited and Marshalls of Honolulu, HI., Inc. (the "Honolulu Lease").
Seller shall, and shall cause its affiliates (as defined in the Honolulu
Lease) to, take no action which shall permit the landlord under the
Honolulu Lease to collect additional rent as a result of the
circumstances described in Section 6.02 of the Honolulu Lease. Buyer
hereby agrees with Seller that the Seller's retail store divisions
(other than the Company and its Subsidiaries), as currently operated,
do not constitute a "business similar to or competing with the business
conducted at the demised premises" within the meaning of Section 6.02 of
the Honolulu Lease, and accordingly, operating such divisions as
currently operated does not violate the provisions of this Section 14.2.
14.3. Various Equipment and Software.
14.3.1. With effect from and as of the Closing, Seller (or
the applicable Affiliate of Seller) shall assign to the Company or
one of its Subsidiaries all of Seller's or such Affiliate's right,
title and interest under the leases pursuant to which the Company
and its Subsidiaries use store point-of-sale equipment and store
RS/6000 equipment, but only to the extent such leases relate to
such equipment to be used in the retail stores of the Company and
its Subsidiaries to be open following the Closing. The obligation
to make such assignment shall cease to exist if following Seller's
use of its reasonable best efforts (and subject to the next
sentence) Seller cannot obtain any third party consent required to
effect such assignment pursuant to the applicable lease
documentation. If after use of reasonable best efforts by Seller
to obtain such consent without the requirement of the payment of
any fee to any such third party to obtain such consent, a fee is
so required to obtain such consent, then Buyer and Seller shall
each bear one-half of such fee or, at the election of Buyer,
Seller shall be released from any continuing obligation under this
Section 14.3.1 to obtain any such required consent or to make such
assignment. If any assignment pursuant to this Section 14.3.1 is
effected, the Company shall assume all obligations of Seller and
its Affiliates under such leases with respect to the equipment
subject to such assignment.
14.3.2. Seller and Buyer hereby agree that each of the
Company and Seller independently has full legal right, title and
ownership in and to the "Retail Expert" software, the Genesis
financial software and the software (the "Peoplesoft
Improvements") developed by the Seller, the Company and their
respective Affiliates related to the Peoplesoft software licensed
to the Seller (the "Peoplesoft Software"); provided, however, that
the Buyer and its Affiliates (including the Company and its
Subsidiaries) shall not have any right to the name "Retail Expert"
in respect of the "Retail Expert" software. The "Retail Expert"
software, the Genesis financial software and the Peoplesoft
Improvements are referred to herein collectively as the
"Applicable Software." The right, title and interest referred to
in the first sentence of this Section 14.3.2 is only in respect of
the Applicable Software as developed through the Closing. None of
the Seller or its Subsidiaries shall have any right to any
improvements made to the Applicable Software following the Closing
by Buyer or its Subsidiaries and none of Buyer or its Subsidiaries
shall have any right to any improvements made to the Applicable
Software following the Closing by Seller or its Subsidiaries. At
the option of Buyer, Seller shall sell to Buyer one copy of the
Peoplesoft Software at the per copy price originally paid by
Seller to acquire the license to the Peoplesoft Software. Seller's
obligation to effect such sale shall be subject to obtaining,
without cost to Seller, any required consent of the licensor under
such license.
14.4. ADS Project. Seller shall promptly pay over to the Company
following the Closing any rebates received under the ADS project insofar
as such rebates are attributable to the participation in such project of
the Company or any of its Subsidiaries.
14.5. American Express Corporate Cards. From and after the
Closing, the employees of the Company and its Subsidiaries who use
American Express charge cards pursuant to the corporate card program of
Seller shall cease to participate in such program and shall commence
participation in the American Express corporate card program of Buyer.
14.6. Wilsons. To the extent following the Closing, the Company
and its Subsidiaries possess any merchandise inventories held on
consignment for the Wilsons retail store chain ("Wilsons"), the Company
and its Subsidiaries will return such inventories to Wilsons.
Notwithstanding anything to the contrary set forth in the definition of
the term "Excluded Liabilities", the Company and its Subsidiaries shall
pay to Wilsons any amounts owed and unpaid to Wilsons as of the Closing
in respect of the consignment arrangements existing between Wilsons and
the Company prior to Closing to the extent a payable or other liability
in respect of such amounts is recorded on the Closing Balance Sheet and
is included in the determination of the amount of Company Net Assets.
14.7. Footaction. Notwithstanding anything to the contrary set
forth in the definition of the term "Excluded Liabilities," the Company
and its Subsidiaries shall pay to the Footaction retail store chain
("Footaction") any amounts owed and unpaid to Footaction as of the
Closing in respect of merchandise inventory purchased by the Company and
its Subsidiaries from Footaction prior to the Closing to the extent a
payable or other liability in respect of such amounts is recorded on the
Closing Balance Sheet and is included in the determination of Company
Net Assets.
14.8. Store No. 378. The Company shall pay to Seller the amount
of any cash payments or rental reductions received after the date hereof
by the Company or any of its Subsidiaries in respect of the current
lease for Store No. 378 to the extent such cash payments or rental
reductions are attributable to the obligations of the landlord to
reimburse the Company or any of its Subsidiaries for the repair of
earthquake damage previously incurred at such store. The Company shall
make such payments to Seller promptly following receipt of any such cash
payments or as and when the amounts of rental reductions would otherwise
have been payable to the landlord in the absence of the agreement of the
landlord to accept reduced rents.
2. Consent to Intercompany Transfer of Buyer Stock. Buyer hereby consents
to the transfer by Seller of the Buyer Stock to a wholly owned Subsidiary of
Seller (the "Transferee Subsidiary"); provided, that any event which causes
the Transferee Subsidiary to cease to be a wholly owned Subsidiary of Seller
shall be deemed to be a transfer of Voting Securities by Subscriber within the
meaning of the Standstill and Registration Rights Agreement. Effective upon
the transfer of the Buyer Stock to the Transferee Subsidiary, all of the terms
and provisions of the Preferred Stock Subscription Agreement and the Standstill
and Registration Rights Agreement shall be binding upon and inure to the
benefit of the Transferee Subsidiary in the capacity of the Subscriber
thereunder. Following such transfer, such terms and provisions shall also
continue to be binding upon and inure to the benefit of Seller in the capacity
of the Subscriber thereunder.
3. Effect on Stock Purchase Agreement. Except to the extent of the
amendments set forth specifically herein, all provisions of the Stock Purchase
Agreement are and shall remain in full force and effect and are hereby
ratified and confirmed in all respects, and the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver or amendment of
any provision of the Stock Purchase Agreement not specifically amended herein.
4. Execution in Counterparts; Effectiveness. This Amendment may be
executed in any number of counterparts, each of which shall be deemed for all
purposes to be an original, but all of which together shall constitute one and
the same Amendment. This Amendment shall become effective immediately upon
execution.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Amendment Number One to be executed, as of the date
first above written by their respective officers thereunto duly authorized.
SELLER: MELVILLE CORPORATION
By
Name:
Title:
BUYER: THE TJX COMPANIES, INC.
By
Name:
Title: