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EXHIBIT 10.15(b)
FORM OF
TRADE FINANCING AGREEMENT
This Trade Financing Agreement ("Agreement") made as of the __ th
day of, 1997, is by and between (Company), ("Supplier"), with its principal
offices at (Address1) (Address2), (City), (State) (PostalCode), and Barry's
Jewelers, Inc., a California corporation ("Barry's"), with its principal offices
at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000.
WITNESSETH:
A. RECITALS.
WHEREAS, on May 11, 1997 ("Petition Date"), Barry's filed a
voluntary petition for relief with the United States Bankruptcy Court for the
Central District of California ("Bankruptcy Court") under chapter 11, title 11
of the United States Code, Case No. CA 97-27988-VZ ("Chapter 11 Case");
WHEREAS, Barry's utilizes inventory and other merchandise in its
operations;
WHEREAS, Barry's obtained inventory from Supplier on credit terms
prior to the Petition Date;
WHEREAS, Barry's desires to return to Supplier certain
merchandise purchased prior to the Petition Date, for credit against Supplier's
prepetition claim against Barry's in accordance with the terms of this Agreement
and that certain Trade Financing Agreement Term Sheet ("Term Sheet") by and
among Barry's, the Official Committee of Unsecured Creditors appointed in the
Chapter 11 Case (the "Creditors' Committee"), the Official Committee of
Bondholders appointed in the Chapter 11 Case (the Bondholders' Committee"), and
Bank Boston (the "Collateral Agent"), Xxxxxxx National Life Insurance Company,
Sanwa Business Credit Corporation and the CIT Group/Business Credit, Inc.
(collectively, the "Bank Group"), a copy of which is attached hereto as Exhibit
"A" and incorporated herein by this reference;
WHEREAS, Supplier is willing to accept the return of merchandise
purchased by Barry's prior to the Petition Date, for credit against Supplier's
prepetition claim against Barry's in accordance with this Agreement and the Term
Sheet;
WHEREAS, Barry's desires to obtain merchandise on credit from
Supplier following the Petition Date in accordance with the terms of this
Agreement and the Term Sheet;
WHEREAS, Supplier is willing to supply merchandise following the
Petition Date to Barry's on credit, on the terms and conditions set forth in
this Agreement and the Term Sheet;
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WHEREAS, the Term Sheet was approved, and Barry's was authorized
to enter into Trade Financing Agreements such as this Agreement, pursuant to an
order of the United States Bankruptcy Court for the Central District of
California entered on August 7, 1997; and
WHEREAS, the foregoing Recitals shall be construed as part of
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter contained, the parties do hereby agree as follows:
B. RETURN OF GOODS.
1. Subject to, and in accordance with, the terms of the Term
Sheet, Barry's agrees to return and deliver, and Supplier agrees to accept
return of $amt75 in merchandise purchased by Barry's prior to the Petition Date
(the "Prepetition Merchandise"). For purposes of this Agreement, in accordance
with Bankruptcy Code section 546(g), the Prepetition Merchandise shall be valued
based solely on the purchase price set forth in the prepetition invoice for such
Prepetition Merchandise, subject to verification by Barry's as to accuracy.
Barry's will use reasonable and good faith efforts, in cooperation with
Supplier, to identify the prepetition invoice pursuant to which Supplier shipped
the Prepetition Merchandise. Should Barry's be unable, despite such reasonable
and good faith efforts, to match the Prepetition Merchandise to be returned to
Supplier with Supplier's invoices, Supplier will nonetheless be required to
accept the Prepetition Merchandise (as long as the Prepetition Merchandise being
returned to Supplier is of the same Category or Categories as the merchandise
supplied to Barry's by Supplier prepetition) and to reduce its Prepetition Claim
(as described in paragraph D.1) accordingly. The Categories shall be: (1)
Diamond Merchandise; (2) Watches; (3) Gold Merchandise; (4) Colored Stone
Merchandise; and (5) Miscellaneous. Barry's may select the Prepetition
Merchandise to be returned in its sole and absolute discretion. For all
purposes, as used in this Agreement, the term Prepetition Merchandise does not
include merchandise obtained by Barry's on consignment or memo.
2. Prepetition Merchandise returned to Supplier shall be credited
dollar-for-dollar against and shall offset Supplier's Prepetition Claim.
3. Under any plan of reorganization, the return of the
Prepetition Merchandise shall not be treated as an early "distribution" or early
"dividend" to Supplier on account of Supplier's Prepetition Claim, but rather,
the amount of Supplier's Prepetition Claim entitled to distributions or
dividends under such a plan shall be the amount remaining after the credit and
offset of such claim for the value of the Prepetition Merchandise returned.
4. In accordance with the terms of the Term Sheet, on or before
September 30, 1997, Barry's shall not return Prepetition Merchandise having more
than
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a value of thirty-seven and one-half percent (37.5%) of Supplier's Prepetition
Claim. Any additional returns shall be made in accordance with the Term Sheet.
Barry's shall keep Supplier apprised of the timing and amount of any additional
returns.
C. POSTPETITION CREDIT.
1. Supplier hereby agrees to provide postpetition revolving
credit for merchandise purchases to Barry's on 90-day terms in an amount not
less than $amt25, an amount equal to two and one-half times the value of the
Prepetition Merchandise to be returned to Supplier (which minimum level of
credit is hereinafter referred to as the "Minimum Credit Commitment"), for a
period of one year form the date of this Agreement. The Minimum Credit
Commitment shall terminate earlier if there is an uncured and unwaived Event of
Default by Barry's under this Agreement (as set forth in Section F hereof) or an
Event of Default by Barry's under the Term Sheet (as set forth in Section G
hereof).
2. Supplier will accept orders from Barry's for the purchase of
any goods offered by Supplier for sale to retailers at the same prices offered
by Supplier to Supplier's other mall-based customers of a similar size ("Similar
Customers"), and all shipments must be upon the industry's normal and customary
delivery schedules for the particular type of merchandise. Any and all Credit
Merchandise shall be delivered and accepted pursuant to written policies and
procedures substantially in the form of Exhibit "B" hereto. Supplier will accept
from Barry's returns of any and all Credit Merchandise on terms no less
favorable than Supplier extends to Similar Customers.
3. To the extent provided in the Term Sheet, Supplier will
receive a superpriority administrative claim pursuant to Bankruptcy Code ss.
364(c)(1) for all unpaid payables under this Agreement subordinate only to any
superpriority administrative claim of the Collateral Agent for a failure of
adequate protection by use of cash collateral.
4. Upon execution of this Agreement, Barry's will promptly
provide Supplier with an inventory of approximately fifty percent (50%) of the
Prepetition Merchandise to be returned to Supplier. Barry's shall return the
Prepetition Merchandise to Supplier according to the terms of the Term Sheet.
D. RECONCILIATION.
1. Barry's and Supplier agree to cooperate with each other in
conducting a joint review and reconciliation of Barry's prepetition accounts
payable to Supplier, with a view to determining and agreeing upon the exact
amount of Supplier's prepetition claim to be allowed against Barry's in the
chapter 11 case ("Prepetition Claim"); pending agreement on the amount of the
Prepetition Claim, for purposes of determining the maximum amount of Prepetition
Merchandise that may be returned initially and credited against the Supplier's
Prepetition Claim, Barry's records shall be determinative. If Barry's and
Supplier have not reconciled the vendor's Prepetition
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Claim before September 1, 1997, the participating vendor may ask the Court to
resolve the dispute. The Collateral Agent, the Bank Group and the Bondholders'
Committee shall be deemed parties-in-interest in this reconciliation proceeding
before the Court. If the Court determines that the Prepetition Claim is greater
than that asserted by Barry's, paragraph B.1 above shall be increased
accordingly (and Barry's will return additional Prepetition Merchandise to
Supplier subject to the limitation set forth in paragraph 2 of the Term Sheet)
provided that Supplier increases its Minimum Credit Commitment pursuant to
paragraph C.1 and otherwise complies with the terms of this Agreement and the
Term Sheet.
E. TERM OF AGREEMENT; ASSIGNABILITY.
1. This Agreement and the Minimum Credit Commitment shall remain
in full force and effect for a minimum term of one year from the date hereof
unless terminated earlier in accordance with this Agreement or the Term Sheet.
Notwithstanding any expiration or termination of this Agreement, except for the
Minimum Credit Commitment and Supplier's obligations to ship Credit Merchandise,
upon any such termination or expiration the remaining provisions of this
Agreement shall remain in full force and effect until all Credit Merchandise
delivered to Barry's has been paid for in full, unless this Agreement is
terminated in accordance with paragraph H hereof.
2. This Agreement is not assignable without the prior written
approval of Supplier and Barry's in their respective sole discretion.
3. This Agreement shall be binding upon Supplier and its
successors and assigns.
F. EVENTS OF DEFAULT BY BARRY'S UNDER THIS AGREEMENT.
1. The following shall constitute Events of Default under this
Agreement by Barry's:
a. Default in the payment or performance of any of Barry's
obligations or agreements hereunder which continues for more than ten
(10) business days after Barry's receipt of written notice thereof; or
b. Any representation or warranty made by Barry's herein
or in any certificate, statement or agreement, including but not limited
to any of such furnished in connection with this Agreement, should prove
to be false or misleading in any material respect.
2. Any material breach of this Agreement or Event of Default
under this Agreement which, in either case, remains uncured for ten (10)
business days after Barry's receipt of written notice of such breach or Event of
Default under this Agreement, shall entitle Supplier to retain all benefits
hereunder but be relieved of any and all further obligations to provide Barry's
with merchandise.
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G. EVENTS OF DEFAULT BY BARRY'S UNDER THE TERM SHEET.
1. The occurrence of any of the events set forth in sections a
through e of paragraph 8 of the Term Sheet, unless waived in writing by the
Creditors' Committee in its sole discretion, shall constitute an Event of
Default by Barry's under the Term Sheet.
2. Unless waived in writing by the Creditors' Committee in its
sole discretion, any material breach of the Term Sheet by Barry's or the
occurrence of an Event of Default by Barry's under the Term Sheet which, in
either case, remains uncured for ten (10) business days after Barry's receipt of
written notice of such breach of Event of Default by Barry's under the Term
Sheet, shall entitle Supplier to: (i) retain all benefits under this Agreement
but to be relieved of any and all further obligations to provide Barry's with
merchandise; and (ii) share, on a pro-rata basis (based on Supplier's claims
under this Agreement) in the proceeds from the Trade Trust and/or the Trade
Subordination (both as defined in the Term Sheet) as and to the extent set forth
in the Term Sheet.
H. EVENTS OF DEFAULT BY SUPPLIER.
1. As used herein, the term "Event of Default by Supplier" shall
mean the occurrence of any one or more of the following:
a. Default in performance of any of Supplier's obligations
or agreements hereunder which continues for more than ten (10) business
days after Supplier receives written notice thereof; or
b. Any representation or warranty made by Supplier herein
or in any certificate, statement or agreement furnished in connection
with this Agreement should prove to be false or misleading in any
material respect.
2. Any material breach of this Agreement by Supplier or any Event
of Default by Supplier which, in either case, remains uncured for ten (10)
business days after Supplier's receipt of written notice of such alleged
material breach, shall result in Supplier forfeiting all rights and protections
under this Agreement and the Term Sheet. Barry's shall also retain all rights
and remedies available under applicable law. Barry's agrees to promptly provide
written notice of any material breach by Supplier under this Agreement.
I. OTHER PROVISIONS.
1. Each party to this Agreement agrees that if it hereafter
commences, joins in, or seeks relief through any suit arising out of this
Agreement, then the prevailing party shall pay to the other party all attorneys'
fees and expenses reasonably incurred by said party in defending or otherwise
responding to said suit or claim. Subject to the foregoing, the parties shall
bear their own respective attorneys' fees and expenses in connection with the
negotiation and implementation of this Agreement.
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2. Except as expressly set forth herein, nothing herein shall be
deemed to waive any claims or causes of action, including any avoidance actions,
of Supplier, Barry's or Barry's estate.
3. Barry's will not use the provisions of Bankruptcy Code section
1129, or any other section of the Bankruptcy Code, to alter its obligations
under this Agreement, unless any such alteration is agreed to by Supplier in its
sole discretion. The effectiveness of a plan of reorganization shall constitute
a termination of this Agreement, and all outstanding payables hereunder shall be
paid as set forth in the Term Sheet, unless Supplier agrees otherwise. Supplier
understands that upon confirmation of such plan, any obligations of Barry's
under this Agreement arising thereafter shall not constitute administrative
priority claims, because Barry's ability to confer administrative priority
status in accordance with law shall cease on confirmation of any such plan.
4. This Agreement and the Term Sheet set forth the parties' final
and entire understanding with respect to its subject matter, cannot be changed,
wavered or terminated orally, and shall be governed by and construed under the
laws of the State of California (without reference to its rules as to conflicts
of law). If any provision shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall not
affect or render invalid or unenforceable any other provision of this Agreement
and this Agreement shall be construed as if such provision were drafted so as
not to be invalid or unenforceable.
5. This Agreement may be executed in counterparts, each of which
when so executed and delivered shall be deemed to be an original, but all of
which taken together shall constitute but one and the same instrument.
Signatures may be exchanged by telecopy, and each party agrees to be bound by
its own telecopied signature and to accept the telecopied signature of the other
party.
6. The Bankruptcy Court in Barry's chapter 11 case shall retain
exclusive jurisdiction regarding this Agreement.
7. Any notice given hereunder or in connection herewith shall be
in writing and shall be deemed effective upon the earlier of personal delivery
(including personal delivery by telecopy), the day of delivery by commercial
courier to a responsible individual or the third day after mailing by certified
or registered mail, postage prepaid, as follows:
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a. If to Barry's:
Barry's Jewelers, Inc.
Attention: Chief Financial Officer
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxxxx & Xxxxx Professional Corporation
Attention: Xxxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
b. If to Supplier:
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With a copy to:
___________________________________________________
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___________________________________________________
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or to such other address as any party may have furnished in writing to the other
party in the manner provided above.
8. Supplier represents and warrants to Barry's that it has not
assigned or transferred any interest in its Prepetition Claim.
9. Each signatory hereto represents and warrants that he or she
has the power and authority to execute and deliver this Agreement on behalf of
the party for whom he or she is executing this Agreement.
10. Each of the parties hereto has agreed to the use of the
particular language of the provisions of this Agreement, and any question of
doubtful interpreta-
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tion shall not be resolved by any rule providing for interpretation against the
party who causes the uncertainty to exist or against the drafter of this
Agreement.
11. The parties to this Agreement shall execute or procure the
execution of such documents and take such steps as may reasonably be required to
give the parties the full benefit of this Agreement and the Term Sheet.
12. To the extent of any inconsistency between this Agreement and
the Term Sheet, the Term Sheet shall govern.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
BARRY'S JEWELERS, INC.: Xxxxx XxXxxxxxxx
Date: __________________________ By_______________________________
Authorized Signatory
(Company) (FirstName) (LastName)
Date: __________________________ By_______________________________
Authorized Signatory
