Franchise Group Newco S, LLC entered into a definitive agreement to acquire Sears Outlet Stores, L.L.C., Leasing Operations, LLC, Outlet Merchandising, LLC and assets of Sears Hometown and Outlet Stores from Sears Hometown and Outlet Stores, Inc. (NasdaqCM:SHOS) for approximately $130 million on August 27, 2019. The purchase agreement provides that Franchise Group will pay aggregate consideration for the  Sears Outlet and Buddy’s Home Furnishing Stores businesses of $121 million in cash, subject to a customary working capital adjustment, plus an additional amount of up to $11.9 million to reimburse Sears Hometown for certain costs it incurs in connection with the Outlet Sale and certain employee payments and insurance costs incurred by Sears Hometown in connection with the merger that, if not reimbursed by Franchise Group, would otherwise reduce the calculation under the merger agreement of net proceeds received by Sears Hometown as a result of the Outlet Sale. The sale of the Sears Outlet business is in accordance with the terms of the agreement and plan of merger between Sears Hometown and ESL Investments, Inc. As a result of the sale, the merger consideration payable by ESL Investments, Inc. and its affiliates in the merger transaction for the outstanding shares of Sears Hometown not owned by ESL Investments, Inc. and its affiliates is estimated to be approximately $3.25 per share in cash, an increase of approximately $1, from the previously announced base merger consideration of $2.25 per share. Concurrently with its entry into the Purchase Agreement, Sears Hometown entered into a letter agreement with ESL Investments which, among other things, provides that, subject to the satisfaction of certain conditions, the merger will close substantially concurrently with the closing of the sale. In a related transaction, Liberty Tax has acquired 41 Buddy’s Home Furnishings stores from A-Team Leasing. Liberty Tax intends to finance the transaction through a combination of new debt, Liberty Tax’s balance sheet cash and/or an equity contribution from an affiliate of Vintage Capital Management, LLC. Liberty Tax has received a commitment from an affiliate of Vintage Capital Management, LLC, to provide it with up to $40 million of equity financing and Franchise Group Newco S has executed debt commitment letter with Guggenheim Credit Services, LLC, as administrative agent and lead arranger, and clients managed by Guggenheim Investments that provides with debt financing in an amount equal to $105 million. The employees of Sears Hometown that are primarily dedicated to the Outlet Segment are expected to transfer with the Outlet Segment in connection with the Outlet Sale, as are Will Powell, Chief Executive Officer of Sears Hometown, E.J. Bird, Chief Financial Officer Sears Hometown, and Michael A. Gray, Chief Operating Officer of Sears Hometown. The consummation of the Outlet Sale is subject to customary closing conditions, including the release of all liens under Sears Hometown’s credit agreements in respect of the assets and entities to be transferred to Franchise Group in the transactions and at least 20 days shall have elapsed since the mailing of the Information Statement to the stockholders of the seller and the consummation of the sale shall be permitted under Regulation 14C of the Securities Exchange Act of 1934. The transaction has been unanimously approved by the Boards of Directors of both Liberty Tax and Sears Hometown, and have also been approved by the Special Committee of the Sears Hometown Board of Directors. In connection with Sears Hometown’s entry into the Purchase Agreement, ESL executed and delivered to Sears Hometown an irrevocable written consent in respect of approximately 55.2% of the outstanding Sears Hometown Common Shares confirming ESL’s approval of an Outlet Sale consummated in all material respects in accordance with the terms set forth in the purchase agreement, to the extent such sale constitutes a 271 Sale. The transaction will not be completed prior to October 11, 2019 and must be completed by October 23, 2019 with scope of extension of deadline by a further seven days. PJ Solomon, L.P. and PJ Solomon Securities, LLC acted as financial advisors and Rory B. O’Halloran, Alan S.Goudiss, Zach Bench, Daniel Kachmar, Tiancheng (T.C.) Huang, John Cannon, Adam Hurwitz, Jordan Altman, Gus Atiyah, Larry Crouch, John Skinner, Max Bradley, Jessica Delbaum, Marie-Alexis Valente, Jason Pratt, Nathan Wood, Kevin Wu, Creighton O’M Condon and Cody L. Wright of Shearman & Sterling LLP acted as legal advisor to the Special Committee of the Sears Hometown Board of Directors. Russell L. Leaf of Willkie Farr & Gallagher LLP acted as legal advisor to Franchise Group Newco S, LLC and Liberty Tax, Inc. The advisory fee for PJ Solomon with respect to the transaction is based on calculation in the event that the closing occurs with some criteria, while the related transaction fee for PJ Solomon was at $2 million.