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Exhibit 10.10.2
FIRST AMENDMENT TO
AGREEMENT FOR PURCHASE
AND SALE OF STOCK
THIS FIRST AMENDMENT TO AGREEMENT ("First Amendment") made January
23, 1998, between and among NEBRASKA BOOK COMPANY, INC., a Kansas corporation
("NBC") and XXXXXX X. XXXXXX, an individual residing in Princeton, New Jersey,
and XXXXXX X. XXXXXX, as trustee of the Xxxxxx X. Xxxxxx Grantor Trust, and
XXXXXX X. XXXXXX, as trustee of the Xxxxxxxx X. Xxxxxx Grantor Trust (referred
to herein individually as a "Shareholder" and collectively as the
"Shareholders") and is made with reference to the Agreement for Purchase and
Sale of Stock dated January 9, 1998, by and between NBC and Shareholders (the
"Agreement").
FOR VALUABLE CONSIDERATION as described in the Agreement, the
parties agree as follows:
1. AMENDMENT OF SECTION 1. Section 1 of the Agreement is hereby
amended in its entirety, and as so amended shall provide as follows:
Subject to the terms and conditions herein contained, at the Closing (as
hereinafter defined) Shareholders shall sell, transfer, assign and deliver
to NBC, and NBC shall purchase from Shareholders, all of the issued and
outstanding shares of capital stock of the Company, $0 par value,
consisting of ninety (90) shares of voting common stock and nine hundred
ten (910) shares of nonvoting common stock (collectively the "Stock").
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2. AMENDMENT OF SECTION 3.1. Section 3.1 of the Agreement is hereby
amended in its entirety, and as so amended shall provide as follows:
3.1 Purchase Price. The total consideration to be paid to Shareholders for
the Stock shall consist of the sum of Three Million Eight Hundred Ninety-
three Thousand Nine Hundred Forty Dollars ($3,893,940) (the "Cash
Consideration") subject to adjustment as provided herein.
3. AMENDMENT OF SECTION 3.3. Section 3.3 of the Agreement is hereby
amended in its entirety, and as so amended shall provide as follows:
3.3 Deferred Consideration. The "Deferred Consideration" payable to
Shareholders shall be subject to reduction as provided in Section 9.3 of
this Agreement. If NBC incurs any Damages as described in Section 9.1, NBC
shall have the right to set-off any such amounts against the Deferred
Consideration as described in Section 9.3 in addition to any other
remedies to which it may be entitled. As of the Closing, the Deferred
Consideration shall be deposited into an interest bearing trust account
with First Bank, N.A., Lincoln, Nebraska, subject to the terms and
conditions of the Escrow Agreement attached to the Agreement as Exhibit A.
4. AMENDMENT OF SECTION 3.4. Section 3.4 of the Agreement is hereby
amended in its entirety, and as so amended shall provide as follows:
3.4 Net Worth Deficiency. Shareholders shall be liable to NBC on a dollar
for dollar basis for the entire amount that the stockholders' equity of
the Company as of the Closing Date is less than zero dollars ($0) on the
Closing Balance Sheet (such amount less than zero dollars is herein
referred to as the "Net Worth Deficiency"), provided that the maximum
amount of the Shareholders' liability for a Net Worth Deficiency shall not
exceed One Hundred Thousand Dollars ($100,000). For this purpose,
"stockholders' equity of the Company" shall be the difference of total
assets minus total liabilities of the Company, determined in accordance
with generally accepted accounting principles; provided that the amount of
the Net Worth Deficiency shall be adjusted by adding back all or some
portion of the Tax Liability in Section 3.05 hereof and $106,060 of the
distribution to Shareholders in 1998,
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as set forth on the Disclosure Schedule, which is cross-referenced to
Section 5.1(l)(iii) hereof, in an aggregate amount up to but not to exceed
the amount of the Net Worth Deficiency, and the Net Worth Deficiency after
these adjustments shall be the basis for determining the Shareholders'
liability to the Company under this Section 3.4.
5. AMENDMENT OF SECTION 3.5. Section 3.5 of the Agreement is hereby
amended in its entirety, and as so amended shall provide as follows:
3.5 Distribution for Income Taxes. The parties acknowledge that the
Company has elected to be taxed as an "S" Corporation under the Internal
Revenue Code of 1986, as amended (the "Code"). Prior to Closing, the
Company shall distribute to the Shareholders the sum of $545,596.80 (the
"Tax Estimate"), which is an amount estimated by the Shareholders to equal
the amount of federal and state income taxes due by the Shareholders based
on their estimate of $1,125,000 of taxable income of the Company for 1997,
and based on their estimate of $21,000 of taxable loss of the Company for
the portion of 1998 prior to Closing, which is a net aggregate amount of
$1,104,000 (the "Taxable Income"). The Tax Estimate is based on the pro
forma income statement and balance sheet attached to this First Amendment
as Exhibit B-1 for 1997 and for 1998. The amount of income tax shall be
calculated at a combined federal and state effective rate of 49.42% times
the actual taxable income of the Company for such periods and the
aggregate amount of such income tax for both 1997 and 1998 is herein
referred to as the "Tax Liability." A copy of the 1997 and 1998 income tax
returns will be sent to the Shareholders five (5) business days prior to
filing by the Company. If the Tax Liability based on this calculation is
less than the Tax Estimate, the excess shall be promptly refunded to the
Company by the Shareholders; and if the Tax Liability based on this
calculation exceeds the Tax Estimate, NBC shall cause the Company to
distribute to the Shareholders additional sums equal to the excess tax
liability as hereinafter determined which exceeds the Tax Estimate by
$100,000 (hereinafter the "$100,000 Tax Obligation"), provided that any
increase in Tax Liability triggered by a change in reserves as set forth
on the Exhibit B-1 Financial Statements initiated by NBC shall be
distributed to the extent it exceeds the Tax Estimate by $1, and provided
further that the additional amount distributed shall be based on the
aggregate amount of income taxes actually paid by the Shareholders
attributable to the taxable income of the Company that exceeds the Tax
Estimate plus the $100,000 Tax Obligation based on their actual marginal
tax rate (not to exceed 49.42%) times the taxable income of the Company
which exceeds the Taxable Income set forth above, and the Shareholders
shall verify the excess to the reasonable satisfaction of NBC. The parties
shall mutually agree upon an
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independent accounting firm to prepare the Company's returns. An election
shall be made pursuant to ss. 1362(e)(3) of the Code to taxes for 1998 to
be based on an actual physical closing of the books of the Company as of
the Closing Date.
6. AMENDMENT OF SECTION 5.1(h)(i). Section 5.1, subparagraph (h)(i)
of the Agreement is hereby amended in its entirety, and as so amended shall
provide as follows:
(h) Capitalization.
(i) Shares. The authorized capital stock of the Company consists of
2,500 shares of common stock, $0 par value, of which ninety (90) shares of
voting common stock, and no more, and nine hundred and ten (910) shares of
nonvoting common stock, and no more, are issued and outstanding and owned
of record by the Shareholders. No other shares are issued and outstanding
and owned of record by the Shareholders or anyone else.
7. AMENDMENT OF SECTION 7.1(g). Section 7.1(g) of the Agreement is
hereby amended in its entirety, and as so amended shall provide as follows:
(g) Marketing Services. MarketSource Corporation, a Delaware
corporation, an affiliate of Shareholders, and NBC shall execute a
marketing services agreement whereby MarketSource will provide certain
advertising and promotional services, such as a used book buy-back
program. The contact period will begin April 1, 1998, and extend through
March 31, 2000. MarketSource will be obligated to provide $125,000 of
services during each of the 2 years (at standard rates), provided that the
Company shall be granted $75,000 credit against the amount due for the
first year. Any and all third party and/or production fees will be billed
additional subject to NBC's prior approval. The fee for the first year of
$50,000 is due at April 1, 1998 and the fee for year two of $125,000 is
due on April 1, 1999.
8. AMENDMENT OF SECTION 8.1(d). Reference is hereby made to Section
8.1(d), which is hereby amended to delete subsection (ii) thereof. There will be
no accounting services agreement with MarketSource Corporation.
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9. AMENDED DISCLOSURE SCHEDULE. Reference is hereby made to Section
8.1(j) and Section 8.3(e) of the Agreement. The parties hereby approve the
amendments to the Disclosure Schedule attached hereto as Exhibit C-1.
10. AMENDMENT OF SECTION 9.5. Section 9.5 of the Agreement is hereby
amended in its entirety, and as so amended shall provide as follows:
9.5 Indemnification by NBC. NBC hereby agrees to indemnify and hold Xxxxxx
X. Xxxxxx harmless from, against and in respect of any and all damage,
loss, liability or deficiency, including costs and other expenses
(including, without limitation, reasonable legal fees) incurred by the
Shareholders arising out of or resulting from a default by NBC with
respect to the indemnified obligations set forth in the Section 9.5,
resulting from (i) any misrepresentation or breach of warranty or
nonfulfillment of the representations set forth in Section 5.2 of this
Agreement, and (ii) Xxxxxx X. Xxxxxx'x personal guarantee set forth in
ss.14.10 of the Agreement for Sale of Assets and Assumption of Liabilities
dated October 1, 1995, by and among the Collegiate Stores Cooperative,
Inc., a California consumer cooperative (the "Coop"), CSC, Inc., a New
Jersey corporation and Xxxxxx X. Xxxxxx (the "Coop Agreement") of the
following: (A) the obligation to provide free memberships to the 14
founding members until February 28, 2001 as provided in ss.2.02(i) of the
Coop Agreement; and (B) the unpaid aggregate balance not to exceed
$280,000 for consulting payments to the 14 founding members of the Coop;
provided that the amount of the indemnification obligation hereunder shall
not exceed the amounts represented by Shareholders to be due pursuant to
such obligations. NBC's obligation under subsection (i) above shall be
reduced by the difference between $100,000 and the amount actually paid by
the Shareholder, if any, of the $100,000 Tax Obligation.
11. AMENDMENT OF EXHIBITS. Reference is hereby made to Exhibit B and
Exhibit D of the Agreement, both of which are amended and restated in their
entirety as set forth on Exhibit B-1 and Exhibit D-1 attached to this Amendment
and incorporated herein by this reference.
12. CROSS-REFERENCES. All references herein to section numbers shall
mean the section of the Agreement.
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13. RATIFICATION OF TERMS. Except as expressly amended herein, the
parties hereby ratify and affirm all the terms and provisions of the Agreement.
IN WITNESS WHEREOF, this Agreement had been duly executed by
the parties hereto on the day and year first above written.
ATTEST: NEBRASKA BOOK COMPANY, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
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Secretary Its President
Shareholders:
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, Trustee of the
Xxxxxx X. Xxxxxx Grantor Trust
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, Trustee of the
Xxxxxxxx X. Xxxxxx Grantor Trust
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STATE OF New Jersey )
: ss.:
COUNTY OF Xxxxxx )
The foregoing instrument was acknowledged before me this 23rd day of
January, 1998, by Xxxx X. Xxxxxxxx, President of NEBRASKA BOOK COMPANY, INC., a
Kansas corporation, on behalf of the corporation.
(SEAL)
/s/ Xxxxx X. Xxxxxx
-------------------------------
Notary Public
STATE OF New Jersey )
: ss.:
COUNTY OF Xxxxxx )
The foregoing instrument was acknowledged before me this 23rd day of
January, 1998, by Xxxxxx X. Xxxxxx.
(SEAL)
/s/ Xxxxx X. Xxxxxx
-------------------------------
Notary Public
STATE OF New Jersey )
: ss.:
COUNTY OF Xxxxxx )
The foregoing instrument was acknowledged before me this 23rd day of
January, 1998, by Xxxxxx X. Xxxxxx, Trustee of the Xxxxxx X. Xxxxxx Grantor
Trust.
(SEAL)
/s/ Xxxxx X. Xxxxxx
-------------------------------
Notary Public
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STATE OF New Jersey )
: ss.:
COUNTY OF Xxxxxx )
The foregoing instrument was acknowledged before me this 23rd day of
January, 1998, by Xxxxxx X. Xxxxxx, Trustee of the Xxxxxxxx X. Xxxxxx Grantor
Trust.
(SEAL)
/s/ Xxxxx X. Xxxxxx
-------------------------------
Notary Public
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