UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 23, 2019

Sears Hometown Stores, Inc.

(formerly known as Sears Hometown and Outlet Stores, Inc.)

(Exact Name of Registrant as Specified in its Charter)


Delaware	001-35641	80-0808358
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

5500 Trillium Boulevard, Suite 501 Hoffman Estates, Illinois		60192
(Address of principal executive offices)		(Zip Code)

(847) 286-7000

(Registrant’s telephone number, including area code)

Sears Hometown and Outlet Stores, Inc.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Shares, $0.01 par value per share		SHOS		NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.0201. ~~Termination~~Entry ofinto a Material Definitive Agreement.

The information provided under Item 2.0103 is incorporated by reference into this Item 1.0201.

InItem connection with the consummation of the Outlet Sale (as defined below), on October 23, 2019, all amounts outstanding under the senior revolving credit facility (the “ABL Facility”) of Sears Hometown Stores, Inc2. ~~(the “Company”) (formerly known as Sears Hometown and Outlet Stores, Inc~~03. ~~prior~~Creation ~~to the Effective Time (as defined below)) with Bank~~ of ~~America, N.A. as Administrative Agent and Collateral Agent, other than~~ a ~~letter~~Direct ofFinancial ~~credit~~Obligation ~~issued~~or ~~thereunder~~an ~~(the~~Obligation ~~“Letter~~Under ofan ~~Credit”),~~Off-Balance ~~were~~Sheet ~~repaid~~Arrangement ~~in full. Effective upon such repayment, the amended and restated credit agreement for the ABL Facility and all related loan documents, other than the Letter~~ of ~~Credit,~~a ~~were irrevocably terminated in accordance with the terms thereof~~Registrant. ~~The Letter of Credit, in an amount equal to $7,249,867, remains in effect.~~

InOn October 23, 2019 (the “Closing Date”), in connection with the ~~consummation~~closing of the ~~Outlet~~Merger ~~Sale~~(as defined below), onSears ~~October 23~~Hometown Stores, ~~2019~~Inc. (the “Company”), ~~all~~certain ~~amounts~~of ~~outstanding~~its ~~under~~subsidiaries and Transform Merger Corporation (“Merger Sub”) entered into a Revolving Credit and Security Agreement (the ~~Company’s~~“Credit ~~term~~Agreement”) ~~loan~~with PNC Bank, National Association, as Agent, and the lenders from time to time party thereto. The Credit Agreement provides for an $80 million senior secured revolving credit facility (the “~~Term~~Credit ~~Loan~~ Facility”) available to be used by the Company and certain of its domestic subsidiaries for general corporate purposes, including to finance the merger consideration that was paid in connection with ~~Gordon~~the ~~Brothers~~acquisition ~~Finance~~of the Company as ~~Administrative~~in ~~Agent~~accordance with the terms of the previously announced Agreement and ~~Collateral~~Plan ~~Agent~~of ~~were~~Merger, ~~repaid~~dated inas ~~full.~~of ~~Effective~~June 1, ~~upon~~2019, ~~such~~among ~~repayment~~the Company, Transform Holdco LLC (“Transform Holdco”) and Merger Sub (as amended and supplemented by the ~~term~~terms ~~loan~~of ~~credit~~the previously announced letter agreement, dated as of August ~~for~~27, 2019, among the ~~Term~~Company, ~~Loan~~Transform ~~Facility~~Holdco and Merger Sub, the “Merger ~~all~~Agreement” ~~related~~and ~~loan~~the ~~documents~~transactions ~~were~~contemplated ~~irrevocably~~thereby, ~~terminated~~the in“Merger”). ~~accordance~~The ~~with~~Company and each of its material subsidiaries is a borrower, and jointly and severally liable, under the ~~terms~~Credit ~~thereof~~Facility. The Credit Facility matures on October 23, 2024.

~~Item~~Under 2the Credit Facility, the Company will pay quarterly fees of 0.~~01.~~50% ~~Completion~~per annum on the unused portion of ~~Acquisition~~the facility. Loans under the facility will bear interest at a floating rate based, at the Company’s election, on either a customary base rate or ~~Disposition~~a ofcustomary ~~Assets~~LIBOR rate, in each case plus an applicable margin based on availability under the Credit Facility.

OnThe ~~October 23,~~Credit ~~2019~~Agreement (requires the ~~“Closing~~Company ~~Date”),~~to ~~the~~comply ~~Company~~with ~~completed~~a ~~the~~minimum ~~sale~~excess ~~(the~~availability ~~“Outlet~~covenant. ~~Sale”)~~In ofaddition, the ~~Company’s Sears~~Credit ~~Outlet~~Agreement contains other standard affirmative and ~~Buddy’s~~negative ~~Home~~covenants, ~~Furnishing~~such ~~Stores~~as ~~businesses~~those which (~~together,~~subject ~~the~~to ~~“Outlet~~certain ~~Segment”~~thresholds), ~~including~~limit ~~substantially~~the ~~all~~ability of the ~~assets~~Company and ~~liabilities~~its ~~comprising~~subsidiaries ~~the Outlet Segment~~to, toamong ~~Franchise~~other ~~Group~~things, ~~Newco~~incur Sdebt, ~~LLC (“Purchaser”)~~incur liens, anengage ~~indirect~~in ~~subsidiary~~mergers, consolidations ofor ~~Franchise Group~~acquisitions, ~~Inc.~~make ~~(formerly~~certain ~~known as Liberty Tax~~investments, ~~Inc.)~~make ~~(“Parent”),~~distributions ~~pursuant~~on toor ~~the~~repurchase ~~previously~~its ~~announced~~equity ~~Equity~~securities, ~~and~~or ~~Asset~~engage ~~Purchase~~in ~~Agreement,~~transactions ~~dated~~with asaffiliates. Events of ~~August 27, 2019,~~default byunder ~~and among~~ the ~~Company,~~Credit ~~Purchaser~~Agreement ~~and~~include, ~~solely~~among ~~for~~other ~~purposes~~things, ~~of a performance and~~ payment defaults, ~~guarantee~~breaches ~~on behalf~~ of ~~Purchaser~~representations, ~~Parent~~warranties ~~(the~~or ~~“Purchase~~covenants, ~~Agreement”).~~defaults ~~Pursuant~~under tomaterial ~~the~~indebtedness, ~~terms~~certain events of ~~the~~bankruptcy ~~Purchase~~or ~~Agreement~~insolvency, ~~the~~judgment ~~Purchaser~~defaults, ~~paid the~~certain ~~Company~~defaults anor ~~aggregate~~events ~~purchase~~relating ~~price,~~to ~~after~~employee ~~giving~~benefit ~~effect~~plans toor a ~~customary~~change ~~working~~in ~~capital adjustment,~~ control of ~~$119,960,000 in cash (~~the ~~“Sale Proceeds”), and in addition reimbursed the~~ Company. ~~for~~The ~~certain~~events ~~costs~~of itdefault ~~incurred~~would ~~in connection~~permit ~~with~~ the ~~Outlet~~lenders ~~Sale~~to ~~and~~terminate ~~certain~~commitments ~~employee~~and ~~payments~~accelerate ~~and~~the ~~insurance~~maturity ~~costs~~of ~~incurred~~borrowings byunder the ~~Company~~Credit inFacility ~~connection~~if ~~with~~not ~~the~~cured ~~Merger~~within ~~(as~~applicable ~~defined~~grace ~~below)~~periods.

~~Immediately~~Item following the consummation of the Outlet Sale and in accordance with the terms of the previously announced Agreement and Plan of Merger, dated as of June 1, 2019, among the Company, Transform Holdco LLC (“Transform”) (a privately held affiliate of ESL Investments, Inc5.02 ~~(together~~Departure ~~with its investment affiliates, including Edward S. Lampert, “ESL”)) and Transform Merger Corporation (“Merger Sub”) (as amended and supplemented by the terms~~ of ~~the~~Directors ~~previously~~or ~~announced~~Certain ~~letter~~Officers; ~~agreement,~~Election ~~dated as~~ of ~~August 27,~~Directors; ~~2019~~Appointment (the “Letter Agreement”), among the Company, Transform and Merger Sub, the “Merger Agreement”), Merger Sub merged with and into the Company, with the Company as the surviving corporation (the “Merger”). Prior to and in connection with the completion of ~~the Merger,~~Certain ~~Transform~~Officers; ~~assigned~~Compensatory ~~its~~Arrangements ~~rights and obligations under the Merger Agreement to Hometown Midco LLC, a Delaware limited liability company and an affiliate~~ of ~~Transform.~~Certain Officers

1On the Closing Date, pursuant to an action by unanimous written consent of the stockholders of the Company, in connection with the Merger (and not as a result of any disagreement with the Company), Kunal Kamlani, the sole director of the Company, who was appointed in accordance with the terms of the Merger Agreement, ceased to be the sole director of the Company and Steven Swank and Brandon Gartman became directors of the Company.

~~At the effective time of the Merger (the “Effective Time”) and in accordance with the terms~~On ~~of the Merger Agreement~~October 29, ~~each outstanding share of the Company’s common stock~~2019, ~~par value $0.01 per share (~~the ~~“Company~~officers ~~Common Shares”) (other than Company Common Shares (i) owned by ESL or Transform, (ii) held in treasury by the Company or owned by any subsidiary~~ of the ~~Company~~company ~~or (iii) held by stockholders~~ who ~~have~~were ~~demanded~~appointed ~~properly~~ in ~~writing appraisal for such shares in~~ accordance with ~~Section 262 of~~ the Delaware General Corporation Law (the “DGCL”)) was cancelled and automatically converted into the right to receive an amount in cash equal to $3.21, without interest (the “Merger Consideration”). The amount of the Merger Consideration was adjusted upward by $0.96 per Company Common Share (the “Adjustment Amount”) from the previously announced base merger consideration of $2.25 per Company Common Share pursuant to the terms of the Merger Agreement. ~~The~~ceased ~~Adjustment~~to ~~Amount~~be isofficers ~~the quotient~~ of ~~(i) $22,460,000,~~ the ~~amount~~Company byand ~~which~~ the ~~Sale~~persons ~~Proceeds~~listed ~~exceeded~~below ~~the~~became ~~minimum~~officers ~~net proceeds~~ of ~~$97,500,000 provided for in~~ the ~~Merger Agreement, divided by (ii) 23,465,072, the aggregate number of~~ Company: ~~Common Shares and unvested Company restricted stock units issued and outstanding as of the Effective Time.~~

~~The~~• ~~foregoing~~Brandon ~~description of the effects of the Outlet Sale~~Gartman, ~~the~~Chief ~~Purchase Agreement~~Operating ~~and~~Officer ~~the transactions contemplated thereby, the Merger~~ and ~~the~~Secretary; ~~Merger Agreement~~ and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of each of the Purchase Agreement and the Merger Agreement. A copy of the Merger Agreement was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 3, 2019, and is incorporated by reference into this Item 2.01. A copy of the Letter Agreement was attached as Exhibit 2.3 to the Company’s Current Report on Form 8-K filed with the SEC on August 27, 2019, and is incorporated by reference into this Item 2.01. A copy of the Purchase Agreement was attached as Exhibit 2.4 to the Company’s Current Report on Form 8-K filed with the SEC on August 27, 2019, and is incorporated by reference into this Item 2.01.

~~Item~~• ~~3.01~~Steven ~~Notice~~Swank, ofChief ~~Delisting~~Financial orOfficer ~~Failure~~and ~~to Satisfy a Continued Listing Rule or Standard; Transfer of Listing~~Treasurer.

~~The~~Mr. Gartman, ~~information~~age ~~set~~50, ~~forth~~has ~~under~~served ~~Item~~as 2General Manager since October 23, 2019, and Vice President, Operations Services since 2017.01 isPrior to ~~incorporated~~that, byhe ~~reference~~served ~~into~~as ~~this~~Vice ~~Item~~President, 3Operating Services, from 2015 to 2017 and Division Vice President, Outlet Repair & Distribution Centers, from 2013 to 2015.01 All of these positions were at the Company.

~~In connection with the completion of the Merger~~Mr. Swank, ~~the~~age ~~Company notified the Nasdaq Stock Market (the “Nasdaq”) on October 23~~48, ~~2019~~has ~~that each~~served ~~outstanding Company Common Share (except~~ as ~~described~~Divisional inVice Item 2.01) was converted into the right to receive the Merger Consideration pursuant to the Merger Agreement as set forth under Item 2.01. The Company requested that the Nasdaq halt trading of the Common Stock following the close of business on October 23President, ~~2019.~~Finance ~~The~~at ~~Company also requested that~~ the ~~Nasdaq file a Form 25 with the SEC to remove the~~ Company ~~Common~~since ~~Shares from listing on the Nasdaq and to deregister the Company Common Shares pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)~~2012.

~~Additionally,~~Neither ~~the Company~~Mr. Gartman ~~intends~~nor toMr. Swank ~~file~~has ~~with~~any ~~the~~family ~~SEC~~relationship awith ~~Form~~any 15of ~~requesting~~ the ~~termination~~current ofor ~~registration~~former directors and officers of the Company, ~~Common~~nor ~~Shares~~are ~~under~~they ~~Section 12(g)~~participants ofin ~~the~~any ~~Exchange~~related ~~Act~~party ~~and~~transaction ~~the~~required ~~suspension~~to ofbe ~~the~~reported ~~Company’s reporting obligations~~ under ~~Section 13 and~~Item 15404(da) of ~~the~~Regulation ~~Exchange~~S-K ~~Act~~with the Company.

2Item 5.03 Amendments to the Articles of Incorporation or Bylaws

~~Item~~On the Closing Date, pursuant to an action by unanimous written consent of the stockholders of the Company, the amended and restated certificate of incorporation of the Company, as adopted pursuant to the Merger Agreement, was further amended and restated to be in the form of the Second Amended and Restated Certificate of Incorporation attached hereto as Exhibit 3.031. ~~Material~~The ~~Modification~~purpose of this amendment was to ~~Rights~~remedy an inconsistency between the indemnification language in the bylaws of ~~Security~~the ~~Holders~~Company prior to Closing and the certificate of incorporation adopted pursuant to the Merger Agreement.

~~The~~Item ~~information set forth under Items 2.01, 3.01 and~~ 5.0307 isSubmission ~~incorporated~~of byMatters ~~reference~~to ~~into~~a ~~this~~Vote ~~Item~~of ~~3.03.~~Security Holders

InThe ~~connection~~information ~~with~~provided ~~the~~under ~~completion of the Merger, at the Effective Time, each outstanding Company Common Share (except as described in~~ Item 25.~~01)~~02 ~~was~~and ~~converted into the right to receive the Merger Consideration pursuant to the Merger Agreement as set forth under~~ Item 25.~~01,~~03 ~~and~~is ~~holders~~incorporated ofby ~~such~~reference ~~Company~~into ~~Common~~this ~~Shares~~Item ~~ceased to have any rights as stockholders of the Company, except as provided in the Merger Agreement or by law~~5.07.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Directors

In connection with the completion of the Merger (and not as a result of any disagreement with the Company), at the Effective Time, each of the Company’s directors immediately prior to the Effective Time ceased to be directors of the Company. In accordance with the terms of the Merger Agreement, immediately following the Effective Time, the director of Merger Sub immediately prior to the Effective Time, Kunal Kamlani, became the director of the Company.

Officers

In addition, in connection with the completion of the Outlet Sale and effective as of the consummation of the Outlet Sale, each officer of the Company listed below ceased to hold the positions indicated beside such officer’s name:

• Will Powell, Chief Executive Officer and President;

• E.J. Bird, Senior Vice President and Chief Financial Officer; and

• Michael A. Gray, Senior Vice President and Chief Operating Officer.

In accordance with the terms of the Merger Agreement, immediately following the Effective Time, the officers of Merger Sub immediately prior to the Effective Time, who are listed below, became the officers of the Company:

• Kunal Kamlani, President;

• Harold Talisman, Secretary and Chief Financial Officer; and

• Robert Breyer, Treasurer.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Effective upon completion of the Merger, the certificate of incorporation of the Company, as in effect immediately prior to the Merger, was amended and restated to be in the form of the certificate of incorporation attached hereto as Exhibit 3.1 (the “Amended and Restated Certificate of Incorporation”), which is incorporated by reference into this Item 5.03. The Amended and Restated Certificate of Incorporation, among other things, changed the name of the Company to “Sears Hometown Stores, Inc.”

Additionally, pursuant to the Merger Agreement and at the Effective Time, the bylaws of the Company were amended and restated to be in the form of the bylaws attached hereto as Exhibit 3.2, which is incorporated by reference into this Item 5.03.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

Exhibit 2.1		Agreement and Plan of Merger, dated as of June 1, 2019, among Sears Hometown and Outlet Stores, Inc., Transform Holdco LLC and Transform Merger Corporation (Incorporated by reference to the Company’s 8-K filed with the SEC on June 3, 2019)*
Exhibit 2.2		Letter Agreement, dated August 27, 2019, among Sears Hometown and Outlet Stores, Inc., Transform Holdco LLC and Transform Merger Corporation (Incorporated by reference to the Company’s 8-K filed with the SEC on August 27, 2019)*
Exhibit 2.3		Equity and Asset Purchase Agreement, dated as of August 27, 2019, among Sears Hometown and Outlet Stores, Inc., Franchise Group Newco S, LLC, and Liberty Tax, Inc. (Incorporated by reference to the Company’s 8-K filed with the SEC on August 27, 2019)*
Exhibit 3.1		Amended and Restated Certificate of Incorporation of Sears Hometown Stores, Inc.
Exhibit 3.2		Amended and Restated Bylaws of Sears Hometown Stores, Inc.



Exhibit 3.1		Second Amended and Restated Certificate of Incorporation of Sears Hometown Stores, Inc.

* Certain exhibits and similar attachments to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted exhibit or other attachment will be furnished supplementally to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


SEARS HOMETOWN STORES, INC.

By:		/s/ Brandon Gartman
		Brandon Gartman
		Chief Operating Officer

Date: October 2329, 2019

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