EXHIBIT 2.2
AMENDMENT TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT ("Amendment") is made this 31st day of August, 1998, by and
between Tandy Corporation, a Delaware corporation ("Seller"), and CompUSA Inc.,
a Delaware corporation ("Buyer"), and amends the Stock Purchase Agreement dated
as of June 21, 1998 (the "Original Agreement", and as amended hereby, the
"Agreement") between Seller and Buyer.
W I T N E S S E T H:
WHEREAS, Seller owns 100% of the issued and outstanding shares of Series A
and Series B Common Stock (the "Shares") of Computer City, Inc., a Delaware
corporation (the "Company"); and
WHEREAS, Seller and Buyer have entered into the Original Agreement,
pursuant to which Buyer agreed to purchase from Seller all of the Shares on the
terms and conditions specified in the Original Agreement; and
WHEREAS, pursuant to Section 8.1(a) of the Original Agreement, Buyer has
given written notice ("Termination Notice") to Seller that matters, facts or
circumstances involving the Company or its business make it inadvisable for
Buyer to proceed with the Closing (as defined in the Original Agreement); and
WHEREAS, Buyer and Seller have endeavored, in good faith, to resolve
certain matters regarding the Company and have agreed to allocate responsibility
for such matters in an equitable and reasonable manner and, to effect such
allocation, the parties have agreed to enter into this Amendment; and
WHEREAS, in order to induce Buyer to proceed with the Closing, Seller is
willing to modify the terms of the Original Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained herein, and intending to be legally bound hereby, Buyer and
Seller agree as follows:
1. DEFINITIONS. Capitalized terms not otherwise defined in this
Amendment shall have the definitions ascribed to them in the Original Agreement.
All references to the "Agreement" in the Original Agreement shall mean the
Original Agreement as amended hereby.
2. AMENDMENT OF SECTION 1.3. Section 1.3 of the Original Agreement is
hereby amended by replacing the reference to "$12,500,000" with "$48,700,000".
3. AMENDMENT OF SECTION 1.4(b). Section 1.4(b) of the Original Agreement
is hereby amended by replacing the reference to "$12,500,000" with
"$48,700,000", and by replacing all references to "$150,000,000" with
"$136,000,000".
4. ADDITION OF SECTIONS 1.4(c) THROUGH 1.4(f). The following new
Sections 1.4(c) through 1.4(f) are hereby added to the Original Agreement:
(c) Notwithstanding anything to the contrary contained
herein, Buyer and Seller agree that the reserve for repairs to real
estate improvements of the Company (the "Repairs Reserve") as of
August 31, 1998 shall be $100,000. No post-closing adjustment for the
agreed-upon Repairs Reserve shall be made pursuant to Section 1.5, and
Seller shall have no liability for routine repairs to real estate
improvements of the Company beyond the agreed-upon Repairs Reserve.
(d) Notwithstanding anything to the contrary contained
herein, Buyer and Seller agree that: (i) the liability of the Company
and the related reserve for potential warranty claims on the Company's
private label, built-to-order products ("BTO Warranty Liability") as
of August 31, 1998 shall be $800,000; (ii) up to $1,000,000 shall be
added to the existing reserve, if any, of the Company for employee
vacations ("Accrued Vacation") as of August 31, 1998; provided,
however, that in no event shall the reserve for Accrued Vacation
exceed $1,200,000 (for example, if the existing reserve for Accrued
Vacation is $300,000, then $900,000 shall be added; however, if the
existing reserve for Accrued Vacation is $100,000, then $1,000,000
shall be added); and (iii) the reserve for prepaid obligations to
provide software training on and after the Closing Date ("Prepaid
Training") as of August 31, 1998, shall be $1,000,000. No post-closing
adjustment for the agreed-upon BTO Warranty Liability, Accrued
Vacation, or Prepaid Training shall be made pursuant to Section 1.5,
and Seller shall have no liability for BTO Warranty Liability, Accrued
Vacation, or Preferred Training beyond their respective agreed-upon
reserves.
(e) Notwithstanding anything to the contrary contained
herein, neither the Preliminary Closing Balance Sheet nor the Final
Closing Balance Sheet (as it may be adjusted) shall include any asset
value associated with the Tech Factory "Logistics Pipeline" System of
the Company processing system used by the Company at its facility
located at 5400 Sandshell Drive, Fort Worth, Texas, and described in
Item 22 of Section 2.8 of the Seller Disclosure Schedule.
(f) In the event that the gross book value of property and
equipment on either the Preliminary Closing Balance Sheet or the Final
Closing Balance Sheet (as it may be adjusted) exceeds $187,000,000,
the Adjusted Net Book Value shall be decreased, dollar for dollar, by
such excess.
5. AMENDMENT OF SECTION 1.5(b). Section 1.5(b) of the Original Agreement
is hereby amended by adding the phrase "(as it may be adjusted)" after the
phrase "Final Closing Balance Sheet", by replacing the reference to
"$12,500,000" with "$48,700,000", and by replacing all references to "7.5%" with
"9.48%".
6. AMENDMENT OF SECTION 1.5(c). The following new Section 1.5(c) is
hereby added to the Original Agreement:
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(c) SPECIAL INVENTORY ADJUSTMENT. This subsection (c)
relates only to adjustments to the value of the Company's inventory
(the "Inventory") as of the Closing Date based on the quality,
condition, age and categorization of the Inventory, and not to any
adjustments based on errors in accounting or record-keeping for which
GAAP requires a devaluation of inventory. As promptly as reasonably
practicable after the Closing Date, Buyer will provide to Seller any
information obtained by Buyer that Buyer believes would be useful for
purposes of valuing the Inventory. Notwithstanding anything in
Section 1.5(b) to the contrary, if the value of the Inventory in the
Final Closing Balance Sheet, as first presented by Seller pursuant to
Section 1.5(a)(i), exceeds the value of the Inventory in the Final
Closing Balance Sheet, as finally accepted or adjusted pursuant to
Section 1.5(a)(ii) or (iii) (such excess being referred to herein as
the "Inventory Devaluation Amount"), by more than $10,000,000, then
the value of the Inventory in the Final Closing Balance Sheet (as
finally accepted or adjusted) shall be deemed increased, for purposes
of determining the Recomputed Purchase Price pursuant to Section
1.5(b), by an amount equal to the sum of (a) $10,000,000 plus (b) 50%
of the amount by which the Inventory Devaluation Amount exceeds
$10,000,000. If the Inventory Devaluation Amount does not exceed
$10,000,000, then the value of the Inventory in the Final Closing
Balance Sheet (as finally accepted or adjusted) shall be deemed, for
purposes of determining the Recomputed Purchase Price, to be equal to
the value of the Inventory in the Final Closing Balance Sheet, as
first presented by Seller pursuant to Section 1.5(a)(i).
7. AMENDMENT OF SECTION 4.14(c). Section 4.14(c) of the Original
Agreement is hereby amended by replacing the first sentence with the following:
Seller shall provide to Buyer: (i) at Closing, a complete
and correct list containing the number (by location) of all employees
of the Company whose employment was terminated by the Company between
June 1, 1998 and August 8, 1998; and (ii) on or before September 22,
1998, a complete and correct list containing the number by location of
all employees of the Company whose employment was terminated by the
Company between August 9, 1998 and August 31, 1998.
8. ADDITION TO SECTION 5.1(g). Section 5.1(g) of the Original Agreement
is hereby amended by adding the following sentences at the end of such section:
If, following the final determination of the Recomputed Purchase Price
and any payment required by Section 1.5(b), there is any subsequent
indemnity payment made between Buyer and Seller, the Incremental Tax
Cost shall be recalculated. If, as a result of a subsequent indemnity
payment, the Incremental Tax Cost is increased, Buyer shall pay to
Seller an amount equal to such increase within ten (10) days following
the payment of such indemnity payment. If, as a result of a
subsequent indemnity payment, the Incremental Tax Cost is reduced,
Seller shall pay to Buyer an amount equal to such decrease within ten
(10) days following the payment of such indemnity payment.
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9. AMENDMENT OF SECTIONS 9.1(d)(ii) AND 9.1(e)(ii). Sections 9.1(d)(ii)
and 9.1(e)(ii) of the Original Agreement are hereby amended by replacing the
phrase "the outstanding principal balance of the Seller Note at the time such
claims are asserted" with "$136,000,000".
10. REPLACEMENT OF EXHIBIT A TO THE ORIGINAL AGREEMENT. Exhibit A to
Original the Agreement is hereby replaced in its entirety by the form of
subordinated promissory note in the principal amount of $136,000,000 attached
hereto as Exhibit 1.
11. AMENDMENTS AND SUPPLEMENTS TO SELLER DISCLOSURE SCHEDULES. The Seller
Disclosure Schedules shall consist of the Seller Disclosure Schedules attached
to the Original Agreement and those Amended Schedules delivered by Seller to
Buyer and dated as of July 13, 1998 and July 21, 1998, amended and supplemented
as set forth in Exhibit 2.
12. WAIVER AND WITHDRAWAL. Buyer hereby waives any and all leasehold
valuation issues and fixed asset valuation issues raised by Buyer in the
Termination Notice, and there shall be no post-closing adjustment with respect
thereto. Buyer hereby withdraws any request that Seller assume the leases
identified as "Inappropriate Leases" on Schedule B attached to the Termination
Notice. The foregoing shall not constitute a waiver by Buyer of any
indemnification or other rights, and shall not relieve Seller of any
indemnification or other obligations, under the Agreement, other agreements or
otherwise, with regard to the Company or its leases or fixed assets.
13. RATIFICATION. Except as specifically provided herein, no term,
condition or provision of the Original Agreement is amended or modified by this
Amendment. The Original Agreement is hereby ratified and confirmed and shall
remain and continue in full force and effect in accordance with the terms and
provisions thereof, as amended by this Amendment and other written amendments
and modifications executed and delivered by the parties.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
Tandy Corporation
By: /s/ Dwain H. Hughes
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Dwain H. Hughes
Senior Vice President & Chief Financial
Officer
CompUSA Inc.
By: /s/ Robert Gary
-----------------------------------------
J. Robert Gary
Vice President - Finance
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EXHIBITS
The exhibits to the Amendment to Stock Purchase Agreement dated August 31,
1998, which are listed below, have been omitted from this filing, and the
Registrant agrees to furnish supplementally a copy of any omitted exhibit to the
Securities and Exchange Commission upon request.
Exhibit 1 Subordinated Promissory Note dated August 31, 1998 of
the Registrant in the principal amount of $136,000,000
payable to Tandy Corporation.
Exhibit 2 Revisions to Seller Disclosure Schedule.