AGENCY AGREEMENT
THIS AGREEMENT ("Agreement"), made and entered into as
of the 29th day of November, 1995, by and among EDISON BROTHERS
STORES, INC., a Delaware corporation, for itself and each of its
debtor subsidiaries listed in Exhibit A hereto in their capacity
as debtors and debtors in possession in the Cases (as defined
below) (hereinafter referred to collectively as the "Debtors"),
and JUBILEE LIMITED PARTNERSHIP ("Jubilee"), an Ohio limited
partnership, NASSI XXXXXXXXX COMPANY, INC. ("NBC"), a California
corporation and ALCO CAPITAL GROUP, INC. ("Alco"), a Delaware
corporation (hereinafter referred to collectively as "JNA").
W I T N E S S E T H:
WHEREAS, on November 3, 1995, each of the Debtors filed
a petition under chapter 11 of the United States Code in the
United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"), which cases have been administratively
consolidated under Case No. 95-1354 (PJW) and the Debtors have
been authorized in the resulting cases (the "Cases") to continue
the operation and management of their businesses as debtors in
possession;
WHEREAS, the Debtors are the operators of the retail
stores set forth on Exhibits B-1 and B-2 attached hereto (col-
lectively, the "Stores") operating under the names set forth on
Exhibit "C" attached hereto;
WHEREAS, JNA is willing to serve as the exclusive agent
of the Debtors for the limited purpose of conducting the Sale of
inventory in the Stores upon the terms and conditions contained
herein; and
WHEREAS, the Debtors desire to retain JNA as their
exclusive agent upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual cov-
enants and agreements set forth hereinafter, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree intending to be legally bound hereby as follows:
DEFINITIONS.
For purposes of this Agreement, the terms listed below
shall have the meanings indicated:
A. "Adjusted Percentage" shall mean (a) ten percent
(10%) if the Retail Value is greater than or equal to
$91,000,000; (b) ten and one-half percent (10.5%), if the Retail
Value is less than $91,000,000 and greater than or equal to
$86,450,000; and (c) eleven and two-tenths percent (11.2%), if
the Retail Value is less than $86,450,000 and greater than or
equal to $82,000,000.
B. "Affiliate" shall mean any person which controls,
is controlled by, or is under common control with any party to
this Agreement, the term "control" meaning for such purpose the
ownership, directly or indirectly, of at least twenty percent
(20%) of the voting equity in such person.
C. "Approval Order shall have the meaning ascribed
to such term in Subsection 4.2 hereof.
D. "Bankruptcy Court" shall have the meaning ascribed
to that term in the recitals hereof.
E. "Bonus Plan" shall have the meaning ascribed to
that term in Subsection 4.3 of this Agreement.
F. "Breakeven Amount" shall mean an aggregate amount
of Proceeds (less sales Taxes) realized from the Sale equal to
the sum of (a) an amount of Proceeds (less sales Taxes) realized
from the Sale sufficient to generate a Net Return equal to
twenty-two percent (22%) and (b) an amount of Proceeds equal to
the aggregate amount of Sale Expenses paid by the Debtors in
accordance with Subsection 7.2 of this Agreement.
G. "Breakeven Percentage" shall mean the percentage
determined by (a) dividing (i) the Breakeven Amount by (ii) the
Retail Value and (b) multiplying the resulting amount by 100;
provided, however, in no event shall the Breakeven Percentage
exceed the sum of twenty-two percent (22%) plus the applicable
Adjusted Percentage.
H. "Case" shall have the meaning ascribed to that term
in the recitals hereof.
I. "Closing Date" shall mean such date after entry of
the Approval Order as is mutually agreed upon by the Debtors and
JNA.
J. "Damaged Goods" shall have the meaning ascribed to
that term in the Inventory Instructions.
K. "Debtors" shall have the meaning ascribed to that
term in the preamble of this Agreement.
L. "Departure Date" shall mean December 29, 1995 with
respect to those stores listed on Exhibit B-1 and January 29,
1996 with respect to those stores listed on Exhibit B-2, and in
either case shall be the date JNA shall vacate such stores in
accordance with Subsection 4.1 of this Agreement.
M. "Final Order" shall mean an order, judgment or
decree of the Bankruptcy Court or other Court of appropriate
jurisdiction as entered on the legal docket maintained by the
Clerk of the such court that has not been reversed, stayed,
modified or amended and as to which the time to appeal, petition
for certiorari, or seek reargument or rehearing has expired and
as to which no appeal, reargument, petition for certiorari, or
rehearing is pending or as to which any right to appeal, reargue,
petition for certiorari or seek rehearing has been waived in
writing or, if an appeal, reargument, petition for certiorari, or
rehearing thereof has been denied, the time to take any further
appeal or to seek certiorari or further reargument or rehearing
has expired.
N. "Gross Rings" shall mean the aggregate Retail Price
of all Merchandise sold by Debtors in each Store during the
period from the Sale Commencement Date to the Inventory
Conclusion Date for such Store as recorded in the Debtors' cash
register system without giving effect to any point of sale
markdowns or promotional hang tag discounts.
O. "Guaranteed Return" shall have the meaning ascribed
to that term in Subsection 8.1 of this Agreement.
P. "Inventoried Goods" shall mean all items of
Merchandise physically located at the Stores and included in the
Inventory to be taken pursuant to, and in the manner prescribed
by, Section 3; provided, however, that if Merchandise is brought
into the Stores after the Inventory Conclusion Date in accordance
with the terms of this Agreement, such Merchandise shall be
included in the term Inventoried Goods (such Merchandise
hereinafter referred to as "Additional Inventoried Goods").
Q. "Inventory" shall mean the written reports and
computations specified in Section 3 of this Agreement.
R. "Inventory Commencement Date" shall mean in the
case of each Store the date on which the Inventory Service begins
taking the Inventory at each such Store.
S. "Inventory Conclusion Date" shall mean, with
respect to each Store, the date on which the Inventory Service
has concluded at such Store the physical count required to be
made pursuant to, and in the manner prescribed by, Section 3 of
this Agreement.
T. "Inventory Instructions" shall mean the written
instructions to be delivered by the Debtors and JNA to the Inven-
tory Service pursuant to Subsection 3.2, in the form of Exhibit
"D" hereto, governing the manner of determining the Inventory.
U. "Inventory Period" shall mean, in respect of each
Store, the period beginning on the Inventory Commencement Date
for such Store and ending on the Inventory Conclusion Date for
such Store.
V. "Inventory Service" shall mean R.G.I.S. and/or
another inventory service mutually acceptable to the Debtors and
JNA.
W. "Issuing Bank" shall have the meaning ascribed to
that term in Subsection 8.1 in this Agreement.
X. "Layaway Merchandise" shall mean Merchandise which
is held in layaway on the Sale Commencement Date.
Y. "Lease Instruments" shall mean all leases,
occupancy agreements, reciprocal easement or similar agreements
of real property pursuant to which the Debtors have the right to
occupy or utilize the Stores.
Z. "Lessor" or "Lessors" shall mean the lessor,
lessors, or other parties to the Lease Instruments.
AA. "Merchandise" shall mean the goods or items of
inventory acquired or ordered by the Debtors for any Store prior
to the date of this Agreement for resale in the ordinary course
of business; provided, however, that "Merchandise" shall not
include in any event any of the following items: (a) goods not
then owned by the Debtors or, as of the Closing Date, not free
and clear of all liens, charges, security interests and other
encumbrances of any kind or nature whatsoever; (b) goods which
belong to sublessees, licensees or concessionaires of the
Debtors, or which have been placed in the Stores on consignment;
and (c) items or goods at any Store having an expiration date
that is prior to the date that is four (4) weeks from and after
the Sale Commencement Date of such Store. Subject to the terms
and provisions hereof, Merchandise shall include Out of Season
and Damaged Goods and Layaway Merchandise.
AB. "Net Return" shall mean at any time the Proceeds
(less sales Taxes) realized from the Sale at such time divided by
the Retail Value.
AC. "Out of Season Goods" shall have the meaning
ascribed to that term in the Inventory Instructions.
AD. "Payroll Costs" shall mean all direct employee
costs consisting of wages, employer contributions for taxes,
workers' compensation insurance premiums, unemployment taxes,
statutory disability, group life insurance and other similar
employee benefits, provided, that the aggregate payroll taxes and
all employee benefits (including medical insurance) of employees
utilized during the Sale shall not exceed in any event fourteen
and one-half (14-1/2%) of the applicable gross wages of such
employees, and provided, further, that "Payroll Costs" shall
exclude severance pay (or any other termination payment),
pension or similar benefits, sick pay, holiday pay, vacation pay
and retention bonuses.
AE. "Proceeds" shall mean all proceeds, receipts or
payments of any kind or nature realized upon the Sale or other
disposition of Merchandise after the Sale Commencement Date
including, without limitation, proceeds relating to Gross Rings
in respect of sales of Merchandise at each Store from the Sale
Commencement Date to the Inventory Conclusion Date at such Store
and any insurance proceeds realized on account of Merchandise.
AF. "Retail Price" shall mean (a) the lesser of (i)
the lowest ticketed price for each particular item of Merchandise
(including Layaway Merchandise) (net of any applicable permanent
reductions, deductions or markdowns with respect to such item of
Merchandise indicated on such ticket) or (ii) to the extent
practicable or determinable, the price recorded in respect of
each item of Merchandise at each Store on the Inventory
Commencement Date in the Debtors' cash register system, and in
either case excluding any point of sale markdowns and promotional
hang tag discounts; provided, however, that (x) where identical
items of Merchandise on the Inventory Commencement Date bear
different ticketed prices, the Retail Price of each item of such
Merchandise shall be the lowest ticketed price of such identical
items in the event that clause (ii) above does not apply to such
Merchandise; and (y) the Retail Price of each item of Merchandise
shall not include any sales, gross receipts, excise or similar
tax and (b) with respect to Additional Inventoried Goods, the
Retail Price for such Merchandise calculated in the manner set
forth in (a) above as if such Merchandise constituted Inventoried
Goods at the Stores on the Sale Commencement Date less any
discount, markdown or other price reduction in effect at the time
such Merchandise is brought into the Stores.
AG. "Retail Value" shall mean the sum of (i) the Gross
Rings from the Sale Commencement Date to the Inventory Conclusion
Date for each Store and (ii) the aggregate Retail Price of the
Inventoried Goods (including the Additional Inventoried Goods) as
stated in the final, certified and audited report of the
Inventory Service, as such report is mutually agreed to by JNA
and the Debtors.
AH. "Sale" shall mean the sales of Merchandise at each
of the Stores as provided in Section 4 of this Agreement.
AI. "Sales Budget" shall have the meaning ascribed to
that term in Subsection 4.3 in this Agreement.
AJ. "Sale Commencement Date" shall mean November 24,
1995; it being understood and agreed that the Sale Commencement
Date for purposes of this Agreement shall be November 24, 1995
even if the conditions precedent set forth in Section 12 of this
Agreement are satisfied after such date.
AK. "Sale Expenses" shall have the meaning ascribed to
that term in Subsection 7.2 of this Agreement.
AL. "Sale Termination Date" means as to any Store the
date that JNA shall determine, in its sole discretion, to
terminate the Sale as to such Store; provided, however, that with
respect to each Store the Sale Termination Date shall in any
event be no later than the Departure Date unless the Debtors and
JNA mutually agree to extend the Sale and the Departure Date
(hereinafter referred to as the "Extended Period"), in which case
JNA shall be responsible for all costs and expenses incurred in
connection with the Sale during such Extended Period, including,
without limitation, occupancy costs, utility costs, payroll and
benefit costs and all other expenses identified in Section 7
hereof; provided, further, that notwithstanding any of the
foregoing, in the event that with respect to any Store the Sale
is interrupted because of a force majeure event identified in
Section 25 hereof such that sales of Merchandise may not be made
in the ordinary course of business during such period, then with
respect to such Store(s) the Sale Termination Date and Departure
Date shall be extended by the number of days that sales of
Merchandise could not be made and the Debtors shall be
responsible for the occupancy costs and other costs and expenses
it is responsible for during the initial sale period, provided,
however, that no extension of the Sale Termination Date or
Departure Date shall be beyond the expiration of the current
lease term under the applicable Lease Instrument.
AM. "Section" and "Subsection" shall mean a section or
subsection of this Agreement.
AN. "Store" shall mean any retail store described in
Exhibit "B-1 or B-2" hereto, and "Stores" shall mean all of the
retail stores described in Exhibit "B-1 or B-2" hereto.
AO. "Store Fixtures and Equipment" shall mean all of
the fixtures, equipment, furniture, furnishings and all
appurtenances thereto located at the Stores.
AP. "Supplies" shall mean all supplies including, but
not limited to, signs, bags, boxes, ribbons, hangers, twine,
paper and similar sales materials located at the Stores.
AQ. "Taxes" shall mean those Taxes which JNA is
required to pay to the Debtors pursuant to Subsection 4.10 of
this Agreement.
I. AGENCY.
The Debtors hereby irrevocably appoint JNA as the
Debtors' exclusive agent for the limited purpose of conducting
the Sale in the Stores. JNA hereby accepts such exclusive
appointment and agrees to act as the Debtors' exclusive agent in
accordance with the terms and conditions of this Agreement.
II. INVENTORY.
A. Promptly upon entry of the Approval Order, the
Debtors shall cause the Inventory Service to take a physical
retail value inventory (the "Inventory") consistent with the
Inventory Service's normal and customary practices (and ac-
ceptable to both JNA and the Debtors) of all of the Merchandise
physically located at the Stores on the Inventory Commencement
Date for such Stores. The taking of the Inventory at each Store
shall occur in the evening after customary Store closing time or
in the morning prior to customary store opening time. Items of
Merchandise received at the Stores during the Inventory Period,
if any, shall (i) be kept physically segregated from the other
items of Merchandise located at the Stores on the Inventory Com-
mencement Date, and (ii) be counted and added to the Inventory,
if possible, during the Inventory Period, and if not, immediately
thereafter.
B. Prior to the Inventory Commencement Date, the
Debtors and/or JNA shall deliver the Inventory Instructions to
the Inventory Service and shall instruct the Inventory Service to
comply with such instructions in conducting the Inventory. The
Inventory Service shall be additionally instructed by the Debtors
and JNA to prepare and deliver to the Debtors and JNA, no later
than the second day after the date that the Inventory Service has
concluded the Inventories at all of the Stores, the final report
of Inventory, showing a written certified computation of the
value of the Inventoried Goods at the Stores computed at the
Retail Price.
C. The Debtors shall have one or more of their em-
ployees and representatives present at each of the Stores to
observe the physical counting and review the listing and tab-
ulation of the Inventory and verify and test the same. JNA shall
have one or more of its own employees and representatives present
at each of the Stores to observe the physical counting and review
the listing and tabulation of the Inventory and verify and test
the same. The final determination of the Inventory Service with
respect to the Inventory shall be binding for all purposes of
this Agreement, absent manifest error in any calculation. Each
party shall bear the cost of its permitted employees and
representatives used in observing and verifying the Inventory.
The costs and expenses of the Inventory Service for performing
the Inventory shall be divided equally between and paid by JNA
and the Debtors.
D. Unless the parties otherwise agree, during the
Inventory Period no item of Merchandise shall be shipped or
delivered from the Stores.
E. Prior to or during the inventory count at the
Stores, the Debtors and JNA shall inspect the Stores for the
purpose of jointly identifying Damaged Goods. Notwithstanding
any of the foregoing, Inventoried Goods that are Damaged Goods
shall be physically segregated by the Debtors prior to or during
the Inventory Period and shall be valued at a Retail Price
acceptable to the Debtors and JNA. It is the intention of the
parties to find an acceptable Retail Price for each of the
Damaged Goods, provided, that if the parties cannot reach an
agreement after reasonably using their best efforts to find an
agreeable value, then such Damaged Goods shall not be deemed to
be Inventoried Goods and such goods and any proceeds realized
therefrom shall remain the sole and exclusive property of the
Debtors.
3.6. Prior to the Sale Commencement Date, the Debtors
may transfer Merchandise into the Stores from their warehouse or
distribution centers in the ordinary course of business.
3.7 Neither JNA nor the Debtors shall bring any
additional merchandise into any Store during the Sale with the
exception of Merchandise transferred from other Stores.
III. CONDUCT OF THE SALE.
A. JNA shall conduct a Sale with respect to the
Merchandise at the Stores on the terms and conditions set forth
herein. The Sale shall commence in respect of all of the Stores
on the Sale Commencement Date, unless such other date is
otherwise mutually agreed to by JNA and the Debtors. JNA shall
conclude the Sale at each Store not later than the Sale Termina-
tion Date for such Store. JNA shall give the Debtors at least
two business days' prior notice of the date on which JNA intends
to conclude the Sale at each Store. JNA shall vacate each of the
Stores and leave each Store broom clean as provided by Section 17
on or prior to the Sale Termination Date for such Store as set
forth on Exhibit B-1 or B-2 hereto; provided, however, that JNA
shall be entitled to leave and shall leave any Store Fixtures and
Equipment and unused Supplies, without any fee, cost or expense
to JNA. JNA shall promptly liquidate all Merchandise in the
Stores remaining unsold on the Sale Termination Date. All monies
received upon such liquidation shall constitute Proceeds subject
to the terms of this Agreement.
B. All sales of Merchandise during the Sale shall be
on behalf of the Debtors; provided, however, that,
notwithstanding anything in this Agreement or otherwise, JNA
shall be entitled to be paid any Agent Fee from the Proceeds
realized therefrom. From and after entry of an order of the
Bankruptcy Court approving this Agreement in accordance with
clause (v) of Subsection 12.1 hereof (the "Approval Order") and
subject to the terms of such Order, JNA, as exclusive agent for
the Debtors, shall have the right, subject to applicable law and
the limitations set forth herein, to:
1. conduct the Sale in the names set forth on Exhibit
"C" attached hereto;
2. create advertising and set Store hours (provided,
however, that such Store hours at all Stores shall comply
with such minimum, maximum, opening or closing hours as may
be set forth in the Lease Instruments applicable to any such
Store and applicable law), manage Store housekeeping by the
Debtors' employees and Store security;
3. select and schedule the number and type of
personnel required by JNA to conduct the Sales, including
security personnel;
4. determine the discount from the Retail Price at
which the Merchandise is to be sold; and
5. consolidate Merchandise among the Stores for
purposes of the Sale.
C. JNA shall provide the Debtors with an operating
budget (the "Sales Budget") setting forth all anticipated Sale
Expenses in connection with the Sale prior to the Sale
Commencement Date. As an incentive to ensure employee loyalty
and hard work, JNA will utilize a performance-based bonus plan
for the Debtors' Store management and JNA's supervisors
designated by JNA (the "Bonus Plan") which will emphasize the
maximization of Proceeds from the Sale. The total amount of the
Bonus Plan will be included in the Sales Budget to be submitted
to the Debtors in accordance with this subsection. Throughout
the course of the Sale, JNA will keep the Debtors and their
representatives reasonably informed on the progress of the Sale
and any significant developments that may arise.
D. All employee issues and matters arising after the
commencement of the Sale shall be referred to the Debtors, which
shall continue to process the payroll for Store employees.
E. JNA may use the Debtors' employees to the extent
JNA deems feasible, and JNA may select and schedule the number
and type of Debtors' employees required for the Sale.
Notwithstanding the foregoing, the Debtors' employees shall at
all times remain employees of Debtors. JNA shall take no action
with respect to the Debtors' employees contrary to current
policies of the Debtors. To the extent practicable, JNA shall
provide the Debtors with seven (7) days prior written notice as
to the number and type of employees, if any, to be terminated
prior to the Sale Termination Date in each Store. JNA shall
promptly notify the Debtors of any resignations by employees
during the Sale.
F. The Debtors and JNA acknowledge and agree that (i)
nothing herein nor any of JNA's actions taken in respect hereto
shall be deemed to constitute an assumption by JNA of any of the
Debtors' obligations relating to any of the Debtors' employees
including, without limitation, vacation, pension, withdrawal,
severance pay, vacation pay, sick leave or pay, maternity leave
or pay or Worker Adjustment Retraining Act ("WARN") claims (if
any); and (ii) the Debtors hereby indemnify JNA in respect to any
claims arising out of or relating to the Debtors' employees,
except as to claims arising out of the gross negligence, wrongful
acts or omissions of JNA or its or their employees, independent
contractors, representatives or agents, and the Debtors are
solely and specifically responsible for all of Debtors'
obligations under any collective bargaining agreements and any
purported oral service contracts. JNA shall indemnify and hold
harmless the Debtors for claims of the Debtors' employees in the
Stores on account of the conduct or actions of the Debtors'
employees arising with respect to the period of the Sale, in
either case directly arising out of the gross negligence or
wrongful acts or omissions of JNA or its or their employees,
independent contractors, representatives or agents, in each case
determined by a Final Order.
G. JNA shall accept bank credit cards accepted by the
Debtors in connection with the Sale at the same rates currently
applicable to the Debtors. It is understood and agreed that the
Debtors shall collect all Proceeds from the Sale, including all
Proceeds from the Sale charged on such cards, less, in the case
of such bank credit cards, any and all actual bank fees, charges
and chargebacks. Neither JNA nor any of its employees,
independent contractors, representatives or agents shall
interfere, with the Debtors' ability to collect Proceeds during
the Sale. Additionally, JNA may accept bank, travel and expense
credit cards or other similar such credit cards in connection
with the Sale, provided, that, all costs and fees associated with
the acceptance of such cards shall be treated as Sale Expenses
hereunder, and all Proceeds therefrom shall be distributed
pursuant to the terms of this Agreement.
H. All Sales shall be advertised as "Final Sale" and
all receipts marked "Final Sale." JNA shall instruct Debtors'
employees to double xxxx for identification purposes all
Merchandise sold during the Sale at a Retail Price greater than
or equal to ten dollars ($10).
I. Except as otherwise expressly provided in this
Agreement, from and after entry of the Approval Order, the terms
of the Sale shall in all respects be as defined by JNA, in its
sole discretion. JNA shall make no express warranties or
representations of any kind regarding the Merchandise; provided,
that, it may pass along to purchasers all direct, applicable
manufacturer's warranties that are not required to be handled or
processed in any way by the Debtors. Additionally, JNA may pass
on any written warranties of the Debtors applicable to any item
of Merchandise bearing any of the names set forth on Exhibit "C"
attached hereto in the packaging of such Merchandise or any
similar variations thereof. JNA and the Debtors shall immedi-
ately notify each other if either of them obtains information
that any Merchandise fails to comply with any applicable consumer
product safety rule or other federal, state or local product
safety standard or rule, or that any such product contains a
defect which could create a substantial product hazard and shall
withdraw any such Merchandise from the Sale and in which case
such Merchandise shall be excluded from the Inventory and shall
not constitute Inventoried Goods for purposes of this Agreement.
J. The Debtors shall collect all sales and use taxes
payable on account of the sale of Merchandise during the Sale to
any taxing authority having appropriate jurisdiction
(collectively, "Taxes"), which Taxes shall be added to the sales
price of such Merchandise and be paid by the customer at the time
such Merchandise is purchased. The Debtors shall, at their
expense, prepare and process all reporting forms, certificates
and other documentation required in connection with the payment
of the Taxes. The Debtors shall maintain such records and supply
such information with respect to sales and Taxes as is required
by the taxing authorities. The Debtors shall provide JNA with
access to such records and information for verification of sales
and sales tax and use tax collections and payments. Provided JNA
has not interfered with the Debtors' ability to collect sales and
use taxes during the Sale, the Debtors hereby jointly and
severally agree to indemnify and hold harmless JNA from and
against any and all damages, fines, penalties, losses, claims or
expenses (including, without limitation, attorneys' fees) JNA may
incur or sustain arising out of the Debtors' failure to pay over
to the appropriate taxing authority any Taxes in connection with
the Sale.
K. JNA shall have the right to use all existing
Supplies located in the Stores in the course of the Sale, for the
purpose of conducting the Sale, without cost or expense. The
Debtors covenant and agree that they will not remove any Supplies
from the Stores from and after the date hereof except by use in
the ordinary course of business. Any Supplies remaining on the
Sale Termination Date shall remain in the Stores.
L. From and after entry of the Approval Order, JNA may
use the names set forth on Exhibit "C" attached hereto and any
logotype or any similar variations thereof in connection with the
Sale. The form of all advertising copy, displays, posters,
signs, banners and other promotional materials (hereinafter
collectively referred to as "promotional materials") shall be
submitted to the Debtors, to the attention of Xxxxx Xxxxxx, Xxxx
Xxxxxx and Xxxxx Xxxxxx, for their approval or disapproval no
less than 24 hours (expiring on a business day) prior to
placement, such approval not to be unreasonably delayed or with-
held; provided, however, that no such prior approval shall be
necessary for the use of promotional materials in substantially
the form attached hereto as Exhibit "E"; provided, further, that
in the event that the Debtors do not respond to the request by
JNA for the Debtors to approve any promotional materials within
such 24 hours of JNA's submission thereof to the Debtors, the
Debtors shall be deemed to have approved such promotional
materials for purposes hereof. The promotional materials may
contain the words "Store Closing Sale," "Total Inventory
Clearance Sale," "Total Liquidation Sale," "Bankruptcy Sale" and
"Bankruptcy Court Authorized Store Closing Sale" and only such
other similar descriptive terms approved by the Debtors and must
contain a reference to the specific Store locations. In the
discretion of JNA and to the extent not inconsistent with the
Approval Order, Store signs, posters and banners may be placed
within the Stores, in exterior Store windows and outside the
Stores. The Debtors hereby agree to use reasonable efforts at
the reasonable request of JNA, to make advertising or other
promotional placements in the manner prescribed by JNA,
including, without limitation, by permitting JNA to place
advertising in the Debtors' name and/or for the Debtors' account,
at the Debtors' actual net costs. Such advertising costs shall
constitute a Sale Expense under Subsection 7.2 of the Agreement.
M. The Debtors shall not, during the Sale, through use
of an agent or representative other than JNA or otherwise,
conduct a "liquidation", "going-out-of-business", "store closing"
or "total inventory clearance" sale of any of the Debtors' stores
located within a radius of fifty (50) miles of any of the Stores
which competes with the Sale without providing JNA the right to
conduct such "liquidation", "going-out-of-business", "store
closing" or "total inventory clearance" sale as agent to the
Debtors upon the terms and conditions offered by such third party
agent or representative; provided, however, that notwithstanding
the foregoing the Debtors may self-liquidate those stores which
previously have been identified by Debtors to JNA and which are
set forth in Exhibit "F" attached hereto, certain of which may be
within approximately fifty (50) miles of one or more of the
Stores.
N. The Debtors shall be permitted to cancel the
delivery of all goods on order for the Stores and not received
prior to the Sale Commencement Date. Neither JNA nor any of its
employees, independent contractors, representatives or agents
shall accept any goods arriving at the Stores on and after the
Sale Commencement Date. On or before the Inventory Commencement
Date, JNA shall instruct the Debtors' employees to refuse
acceptance of any such goods. Any such goods delivered to a
Store despite JNA's refusal to accept delivery of same shall be
segregated from the Merchandise and disposed of in accordance
with the Debtors' directions.
O. The Debtors shall use reasonable efforts to program
all of the cash registers in the Stores as directed by JNA during
the Sale.
IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEBTORS.
Edison Brothers Stores, Inc., for itself and on behalf
of its Debtor subsidiaries, and each Debtor subsidiary for
itself, hereby represents, warrants and covenants as follows:
A. Each of the Debtors is a corporation, duly
organized, validly existing and in good standing in the state of
its incorporation and is qualified to do business in each of the
states where the failure to so qualify would have a material
adverse effect on the Debtors ability to perform hereunder.
B. The Debtors have taken all necessary action
required to authorize the execution, performance and delivery of
this Agreement and to consummate the transaction contemplated
hereby, except for receipt of approval of the Bankruptcy Court.
X. Xxxxxx Brothers Stores, Inc., in its capacity as
debtor and debtor in possession, is authorized to execute and
deliver this Agreement on behalf of each of its debtor
subsidiaries listed in Exhibit "A" hereto.
D. No contract or other agreement to which any of the
Debtors is a party or by which any of the Debtors is otherwise
bound (other than the Lease Documents and loan documents and
except as provided by the Bankruptcy Court) will prevent or
impair consummation of the transaction contemplated by this
Agreement.
E. The Debtors, as of the Closing Date, shall have
good and marketable title to the Merchandise Inventoried Goods,
and if ordered by the Bankruptcy Court, free and clear of all
liens, mortgages, pledges, charges, encumbrances, equities or
claims of whatever nature, and, to the best of their knowledge,
they are not aware of any Merchandise not being in compliance
with all applicable consumer product safety rules or other
applicable federal, state or local product safety standards or
rules. The Debtors will provide JNA with its policies and
practices regarding product recalls prior to the Inventory
Commencement Date.
F. The Debtors have operated and will continue to
operate their businesses at the Stores up through and including
the Sale Commencement Date in the normal and ordinary course,
employing all practices, policies (including, but not limited to,
pricing practices and policies), procedures and operations in
substantially the same manner as theretofore conducted by the
Debtors. Without limiting any of the foregoing, (i) the Debtors
shall not raise any prices of the Merchandise other than in the
ordinary course of business and shall continue to ship
Merchandise into the Stores in the ordinary course of business up
to the Sale Commencement Date, (ii) the Debtors have not
accelerated or otherwise increased any promotional markdowns with
respect to the Merchandise at the Stores from that which was in
effect on Friday, November 10, 1995 and shall not accelerate any
such markdowns during the period through and including the
Inventory Commencement Date and (iii) the Debtors have taken,
prior to the Inventory Commencement Date, with respect to the
Merchandise at the Stores all appropriate markdowns as is consis-
tent with its normal and ordinary course pricing practices and
policies and have not raised the Retail Prices of any of such
Merchandise other than in the ordinary course of business nor
purchased or transferred any Merchandise or goods outside of the
ordinary course in anticipation of the taking of the Inventory
pursuant to Section 3 or the execution of this Agreement.
G. The Debtors shall maintain in good working order,
at their sole expense, the cash registers, heating systems, air
conditioning systems, elevators, escalators, Store alarm systems,
and all other mechanical devices used in the ordinary course of
operation of the Stores up through and including the Sale
Termination Date.
H. This Agreement is the valid and binding obligation
of the Debtors and is enforceable in accordance with its terms,
subject to obtaining approval by the Bankruptcy Court.
I. Subject to the Debtors' right as debtor in
possession under sections 1107(a), 1108 and 365 of the Bankruptcy
Code, all of the Lease Instruments are in full force and effect
and, in accordance with the Approval Order referred to in clause
(v) of Subsection 12.1, the Debtors are entitled to occupy and
utilize the Stores thereunder through the applicable Sale
Termination Date. Without limitation on any of the foregoing and
in accordance with the Approval Order, the Debtors represent and
warrant that they will not (i) interfere or otherwise disrupt
JNA's right to access and use of the Stores through the
applicable Sale Termination Date, or (ii) fail to take any action
required by the Lease Instruments that may cause another person
to disrupt JNA's right to access and use of the Stores to conduct
the Sale.
J. The Debtors covenant and agree that subsequent to
the Sale Commencement Date they will not pledge, assign, lien,
encumber, charge or otherwise transfer any interest in the
Merchandise without the prior written consent of JNA.
K. The Debtors have no collective bargaining
agreements with their employees, nor are any of their employees
represented by labor unions.
L. No representation made by the Debtors in this
Agreement contains any untrue statement of material fact or omits
to state a material fact which makes such representation
misleading.
V. REPRESENTATIONS, WARRANTIES AND COVENANTS OF JNA.
A. Each of Jubilee, NBC and Alco hereby severally
represents and warrants as follows:
(1)It is a corporation (or in the case of Jubilee,
a limited partnership), duly organized, validly existing and in
good standing under the laws of the state of its incorporation or
formation, as the case may be, and it is qualified to do business
in each state or jurisdiction where the failure to so qualify
would have a material adverse effect on its ability to perform
hereunder.
(2)All necessary action required to authorize the
execution, performance and delivery of this Agreement and to
consummate the transaction contemplated hereby has been taken by
it.
(3)This Agreement is the valid and binding obli-
gation of it enforceable in accordance with its terms, subject to
receiving approval by the Bankruptcy Court.
(4)(i) Subject to obtaining the Approval Order, no
court order or decree of any federal, state or local government
authority, or other action known to it, is in effect which will
or may prevent or impair consummation of the transactions
contemplated by this Agreement; and (ii) to the best of its
knowledge, the consent of any person or entity, is not required
with respect to the transaction contemplated herein.
(5)Subject to obtaining the Approval Order and to
the best of its knowledge, there is no outstanding order,
judgment, injunction award or decree of any court, governmental
or regulatory body or arbitration tribunal by which it is bound
which would materially interfere with this transaction, and there
shall be no action, suit, claim, legal, administrative or
arbitral proceedings or (whether or no the defense thereof or
liabilities in respect thereof are covered by insurance) against
it which would, if determined adversely to it, be likely to have
a material adverse effect upon the transactions contemplated
hereby, nor to the best of its knowledge, are there any facts
which are likely to give rise to any such action, suit, claim or
legal, administrative or arbitral proceeding or investigation.
(6)In conducting the Sale contemplated by the
Agreement, it shall comply with all applicable federal, state and
local laws, ordinances, rules and regulations with respect to
such Sale, except for such laws, ordinances, rules and
regulations which have been superseded by the Approval Order.
(7)No representation made by JNA in this Agreement
contains any untrue statement of material fact or omits to state
a material fact which makes such representation misleading.
B. Subject to the other terms and provisions of this
Agreement, JNA agrees to indemnify and hold the Debtors and any
Affiliate of the Debtors harmless from any liabilities, claims,
losses, damages, costs, or fees (including attorneys' fees and
disbursements) incurred by the Debtors arising out of JNA's gross
negligence or willful misconduct in the conduct of the Sale and
use of any of the Stores and determined by a Final Order of a
court having appropriate jurisdiction, including but not limited
to any claims for personal injury or property damages arising
from JNA's gross negligence or willful misconduct in the conduct
of the Sale and use of the Stores; provided, however, JNA shall
not be required to indemnify the Debtors for any claim arising
out of or attributable to (i) any latent defect in the Stores or
in the fixtures and equipment therein of which JNA is unaware or
of which JNA is aware and has promptly upon discovery notified
the Debtors in writing and (ii) the Debtors' gross negligence or
willful misconduct.
VI. EXPENSES.
A. The Debtors shall be liable for and shall pay the
following items with respect to the Stores through the Sale
Termination Date:
(1)Gross Rentals (including percentage rent,
common area charges, real estate taxes and insurance on the
Stores) and other similar occupancy costs;
(2)Ad valorem taxes, if any;
(3)Maintenance of all items described in
Subsection 5.6;
(4)Utilities (except telephone charges for calls
made);
(5)Store alarm systems; and
(6)All other expenses which are not Sale Expenses
as more fully described in Subsection 7.2 hereof.
B. Additionally, the Debtors shall be liable for and
pay from the Proceeds of the Sale the following expenses directly
incurred during the Sale in connection with the operation of the
Stores from the Sale Commencement Date through the Sale
Termination Date to the extent such expenses are authorized,
approved or otherwise required by JNA in accordance with the
Sales Budget (the "Sale Expenses"):
(1) All direct Payroll Costs for the Debtors'
employees selected and actually used by JNA during the Sale,
including Store manager bonuses;
(2) All compensation and related expenses (including
actual out-of-pocket travel expenses) payable to JNA's
supervisors;
(3) The Bonus Plan for the Debtors' employees and
JNA's supervisors;
(4) The cost and expenses of an armored car service;
(5) Bank card fees, charges and chargebacks;
(6) Telephone charges for calls made (which excludes
instrumental rental, telephone line and phone unit costs);
(7) The cost and expense of moving or consolidating
Merchandise among the Stores;
(8) Security costs;
(9) Trash hauling costs;
(10) Costs and premiums associated with fire and all
risk extended coverage insurance up to $60,000; and
(11) All advertising and promotional expenses for sale
of the Merchandise.
No other cost or expense of any kind or nature will be
authorized by the Debtors or constitute a Sale Expense for
purposes of this Agreement without the prior written consent of
JNA.
C. The Debtors shall cause all Sale Expenses to be
paid on a timely basis. Should the Sale Expenses set forth above
in items (a) through (k), inclusive, exceed, in the aggregate,
the Adjusted Percentage of the Retail Value, one hundred percent
(100%) of such excess amount shall be deducted by the Debtors
from the Agent Fee due JNA or if no Agent Fee shall be due in
accordance with this Agreement, reimbursed to Debtors by JNA
within two days after submission of a written invoice therefor.
D. JNA shall have reasonable access to the Debtors
records necessary for verification of the Sale Expenses.
VII. GUARANTEED RETURN.
A. JNA hereby warrants by way of financial accom-
modation to the Debtors that, in consideration of the right to
act as agent for the Debtors in the sale of the Merchandise, JNA,
regardless of the Proceeds realized therefrom shall guarantee to
the Debtors that the Debtors shall receive an aggregate amount
equal to twenty-two percent (22%) of the Retail Value (hereafter
referred to as the "Guaranteed Return"). As security for the
performance of its obligations in respect of the Guaranteed
Return, JNA shall, within seventy-two (72) hours after entry of
the Approval Order provide to the Debtors an irrevocable,
absolute, standby letter of credit issued by Xxxxx Fargo Bank,
N.A., Chemical Bank, or another bank(s) or financial
institution(s) acceptable to the Debtors (the "Issuing Bank") in
an aggregate amount equal to the product of (a) twenty-two
percent (22%) and (b) of the sum of (i) the aggregate Gross Rings
from the Stores during the period from the Sale Commencement Date
to the date of the entry of the Approval Order and (ii) eighty
percent (80%) of the book value of the Merchandise remaining on
hand on the date of entry of the Approval Order. Within twenty-
four (24) hours after completion and receipt of a final
certification of the Inventory, JNA shall cause the aggregate
amount of such letter of credit to be amended so that it then
equals the Guaranteed Return, less 67% of the Proceeds realized
from the Sale from the Sale Commencement Date to the date
immediately preceding the amendment of the letter of credit. In
either case the letter of credit shall:
(1)be presentable on or after April 20, 1996;
(2)expire if not presented on or before May 31, 1996;
(3)be presentable only at an office of the Issuing
Bank in St. Louis, Missouri or New York, New York;
(4)be subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 and governed and construed under the
laws of the State of New York or California;
(e) be reduced on a weekly basis by an amount
equal to 67% of all Proceeds received by the Debtors during the
previous week; it being understood and agreed that the Debtors
will execute on a weekly basis any documentation requested by JNA
necessary to effectuate such reduction and shall promptly deliver
the same to the Issuing Bank;
(g)be payable upon the presentation of a duly
executed certificate of the chief financial officer of the
Debtors and certifying that each of the following is true and
correct;
a.The Guaranteed Return has not been paid or
received by the Debtors in accordance with the
terms of this Agreement and the Debtors are not
then in breach of any material obligation under
such Agreement;
b.The amount due to be drawn hereunder is
$_________;
c.The amount to be drawn hereunder does not
exceed the amount available on the date hereof to
be drawn under the Letter of Credit;
d.The Letter of Credit has not expired prior
to the delivery of this letter and the
accompanying sight draft; and
e.The payment hereby demanded is requested to
be made no later than ____, ____, time, on
________, 1995 by wire transfer to account number
_____ with __________.
Each capitalized term in the foregoing certificate
shall have the meaning set forth in this Agreement.
VIII. AGENT FEE TO JNA FOR SERVICES RENDERED.
A. As consideration for, and as a fee in respect of,
JNA's efforts and services in connection with the Sale, the gross
Proceeds (less sales Taxes) realized from the Sale from and after
the Sale Commencement Date shall be distributed in the following
manner: (a) one hundred percent (100%) of the dollar value of
the first one percent (1%) of Net Return realized from the Sale
in excess of the Breakeven Percentage shall be paid to JNA; (b)
one hundred percent (100%) of the dollar value of the next two
percent (2%) of Net Return realized from the Sale shall be paid
to the Debtors; (c) one hundred percent (100%) of the dollar
value of the next one percent (1%) of Net Return realized from
the Sale shall be paid to JNA; (d) on a ratable basis, thirty-
five percent (35%) of the dollar value of the next five percent
(5%) of Net Return realized from the Sale shall be paid to JNA
and sixty-five percent (65%) of such Net Return shall be paid to
the Debtors; and (e) on a ratable basis, fifty percent (50%) of
the dollar value of any and all additional Net Return shall be
paid to JNA and fifty percent (50%) of such additional Net Return
shall be paid to the Debtors.
B. Within sixty (60) days of the Sale Termination
Date, Debtors shall submit a Final Reconciliation of all Proceeds
and Sale Expenses (the "Final Reconciliation"). To the extent
JNA requests, the Debtors shall provide JNA with invoices as well
as any and all documentation substantiating in reasonable detail
each item of actual Sale Expenses, including Debtors' bi-weekly
payroll reports. The Final Reconciliation shall be in the form
of a detailed, line item statement certified by an authorized
officer of Debtors. Within twenty (20) days after submission of
the Final Reconciliation, JNA shall forward to the Debtors by
wire transfer to an account designated by the Debtors any amounts
owing to the Debtors in accordance with the terms of this
Agreement as reflected in the Final Reconciliation. In the event
JNA disputes any material item in the Final Reconciliation, JNA
shall notify the Debtors in writing of such dispute and shall pay
by wire transfer the undisputed portion thereof within twenty
(20) days after submission of the Final Reconciliation. Debtors
and JNA shall use their good faith efforts to mutually resolve
any dispute between themselves. Any dispute not so resolved
shall be submitted to the Bankruptcy Court for final resolution.
C. Within thirty (30) days after the Sale Termination
Date Debtor shall forward to JNA by wire transfer to an account
designated by JNA eighty percent (80%) of the estimated Agent
Fee. Within sixty (60) days of the Sale Termination Date,
Debtors shall complete the Final Reconciliation, deliver a copy
to JNA and forward to JNA by wire transfer to an account
designated only by JNA the remaining balance, if any, of the
actual Agent Fee. In the event a portion of the Final
Reconciliation is disputed by JNA, Debtors shall withhold the
disputed amount earmarked until resolution of any such dispute
and wire transfer to JNA the unaffected balance of the Agent Fee.
In the event JNA disputes the Debtors' calculation of the Agent
Fee, JNA must submit prior to the end of the eightieth (80th) day
after the Sale Termination Date, any unresolved dispute to the
Bankruptcy Court for final determination. Notwithstanding any of
the foregoing, upon recovery of the Breakeven Amount by the
Debtors, the Debtors shall pay to JNA any Agent Fee earned
thereafter out of the next Proceeds realized from the Sale.
IX. RETURNS OF MERCHANDISE, GIFT
CERTIFICATES AND CASH CREDITS.
A. JNA shall, if requested by Debtors, accept for like
kind exchange or for credit goods sold by the Debtors prior to
the Inventory Commencement Date provided the goods are in such
condition (exclusive of the need for repackaging or reticketing)
that such goods would have been offered for sale at the Retail
Price by the Debtors. As to such goods for which credit is
given, Proceeds shall be adjusted upward in an amount equal to
the difference between the customer's purchase price of the goods
returned and the price at which such goods were being offered at
the Sale on the date of return; provided, however, that JNA
furnishes to the Debtors the customer's original sales slip dated
prior to the Inventory Commencement Date and a dated return slip
showing the sales price on the date of return. JNA shall xxxx
returned goods for identification purposes as requested by the
Debtors. JNA shall furnish to customers presenting goods sold by
the Debtors prior to the Inventory Commencement Date for return,
refund or exchange but not accepted by JNA by reason of the
condition of such goods, such information regarding returns,
refunds or exchanges as the Debtors shall provide to JNA on or
prior to the Inventory Commencement Date. Except as provided in
this Subsection, JNA shall not be required to accept for return,
credit or refund, any of the Debtors' goods sold prior to the
Inventory Commencement Date.
B. JNA shall accept at full value the Debtors' gift
certificates and cash credits (i.e., credits issued by the
Debtors for goods returned in the past) and such certificates and
credits shall be deemed to constitute Proceeds for purposes of
this Agreement, including the calculation of the Agent Fee
payable to JNA pursuant to Section 9 of this Agreement.
C. JNA shall have sole discretion to make refunds or
credits for Merchandise purchased during the Sale at no cost to
the Debtors.
X. DESTRUCTION, INTERRUPTION.
A. If, during the course of the Sale, any Store is
destroyed or damaged such that the Debtors would not in the ordi-
nary course operate business at such Store, JNA may, at its
option, (a) decline to proceed with the Sale at such Store and,
in such event, move the Merchandise to another Store or Stores or
another locality where the Sale of such Merchandise can continue
or (b) terminate this Agreement as to such Store(s) and exercise
the rights provided under Subsection 11.2.
B. If the Sale at any Store is interrupted for more
than forty-eight (48) hours by an event described in Section 25,
JNA or the Debtors may, in their discretion, terminate this
Agreement as to such Store as of the time of the interruption.
Upon such termination:
a. JNA shall thereupon be relieved from its obli-
gations to act as agent for the Debtors under this Agreement
without liability of any kind and JNA shall have the right to
move the Merchandise in such Store to another location; and
b. Neither party shall be liable to the other for
damages of any kind.
XI. CONDITIONS PRECEDENT.
A. JNA's and the Debtors' obligation to consummate the
transactions contemplated by this Agreement, including its
obligation to pay the Guaranteed Return, is subject to, and
conditioned upon the following conditions being satisfied on or
before the Closing Date:
a. entry of the Approval Order on or before December
5, 1995
b. all of the representations and warranties of the
Debtors under Section 5 and JNA under Section 6 of this Agreement
shall be true and correct in all material respects on the Closing
Date;
c. the Retail Value as of the Sale Commencement Date
shall not be less than $82 million dollars;
d. the entry of an order by the Bankruptcy Court
contemporaneously with or prior to any competitive bidding on
this Agreement approving the reimbursement by the Debtors to JNA,
in the event that the Bankruptcy Court shall approve a
transaction involving all or any of the Merchandise or the
Proceeds to a third party (such transaction being referred to as
the "Approved Transaction"), of out of pocket costs and expenses,
including attorneys' fees and expenses, incurred by JNA in
connection with the transaction contemplated hereby not to exceed
three hundred thousand dollars ($300,000) in the aggregate to be
paid upon the demand by JNA out of the proceeds realized by the
Debtors on the Approved Transaction; and
e. the entry of an Order by the Bankruptcy Court, in
form and substance acceptable to JNA and the Debtors, (i)
approving this Agreement and authorizing the Sale; (ii) providing
that to the extent that JNA is entitled to the payment of the
Agent Fee by the Debtors from the Proceeds collected or otherwise
received in connection with the Sale or under this Agreement,
such payment shall be made out of the Proceeds of the Sale free
and clear of any and all liens, claims, rights, mortgages,
pledges, charges, encumbrances or equities of any kind, and
enjoining all persons or entities from taking any action that
interferes with or impedes JNA's collection or other receipt of
such Proceeds; (iii) restraining all persons, corporations,
landlords and governmental bodies and agencies from taking any
action which would adversely affect JNA's ability to conduct the
Sale as contemplated hereunder; (iv) authorizing the advertising,
promotion and signage of the Sale in respect of all of the Stores
as "Store Closing Sale," "Total Inventory Clearance Sale," "Total
Liquidation Sale," "Bankruptcy Sale" and "Bankruptcy Court
Authorized Store Closing Sale", and enjoining and restraining all
Store landlords, their agents or employees from taking any action
that interferes with or impedes the conduct of the Sale, or any
advertising, promotion or signage relating thereto; (v)
relieving the Debtors and JNA from having to comply with any
state and/or local law, statute or ordinance purporting to govern
liquidation store closing, total clearance and/or going-out-of
business sales of any jurisdiction in which any of the Stores is
located; and (vi) authorizing JNA to consolidate the Merchandise
located in the Stores at any time during the conduct of the Sale
as it deems appropriate.
XII. GENERAL PROVISIONS.
13.1. JNA's and the Debtors' obligations hereunder are
subject to approval of the Bankruptcy Court and shall be of no
force and effect in the event that it is not so approved.
13.2. If JNA is enjoined (or temporarily restrained,
and such restraint is not dissolved within forty-eight (48) hours
thereafter) from conducting the Sale in any Store for any reason
whatsoever, JNA shall, at the Debtors' sole cost and expense,
move all Merchandise from such Store to other Stores or another
location, as the case may be, where the Sale may proceed.
13.3. From and after the Closing Date, JNA shall (a)
care for and maintain the Merchandise delivered to the Stores and
(b) care for and maintain the Stores (including the fixtures,
equipment, furnishings, furniture and all appurtenances thereto)
in safe, clean and wholesome condition, normal wear and tear
excepted. JNA shall timely notify the Debtors of any repairs or
maintenance for which the Debtors are responsible under Sub-
section 5.6.
13.4. At all times during the period of the Sale, the
Debtors shall have the right to have their representatives
present in the Stores, at the Debtors' sole cost and expense,
during normal operating hours.
13.5. JNA shall be responsible for all customer
complaints and returns relating to Merchandise sold by JNA during
the Sale.
13.6. All representations and warranties made by the
parties, each to the other, in this Agreement or pursuant hereto
shall survive the consummation of the transaction contemplated by
this Agreement.
13.7. This Agreement, together with the exhibits
attached hereto, sets forth the entire Agreement and under-
standing between the parties as to the subject matter hereof as
of the time this Agreement is executed and merges and supersedes
all prior discussions, agreements and understandings of every
kind or nature between them and no warranty or representation is
made by either party other than as expressly set forth or
provided for in this Agreement or as may be, on or subsequent to
the date hereof, set forth in writing and signed by the party to
be bound thereby. This Agreement may not be changed or modified,
except by agreement in writing, signed by all the parties hereto.
13.8. Time is of the essence of this Agreement.
13.9. If any date for the payment of any sum of money
(but not for the taking of any other action) under this Agreement
falls on a Saturday, Sunday or bank holiday, the due date for
such payment (but not for the taking of any other action) shall
be the next day which is not a Saturday, Sunday or bank holiday.
13.10. Unless otherwise expressly provided herein,
each and every representation, warranty, covenant or other
obligation of JNA hereunder shall be deemed to have been made
independently by each of Nassi, Jubilee and Alco and such parties
shall be jointly and severally liable for any default thereunder.
XIII. INSURANCE.
A. On and after the Inventory Conclusion Date through
and including the Departure Date, the Debtors shall maintain, at
their sole expense, their existing insurance policies in respect
of comprehensive public liability (with broad form personal
injury endorsement) and auto liability insurance covering
injuries to or death of persons and damage to property other than
the Store buildings in or in connection with the operation of the
Stores and the sale of Merchandise therein, including product
liability coverage for injuries or death to persons and damage to
property other than the Store buildings arising from the use or
sale of the same (including injury or damage to property claims
from point-of-sale representations or warranties). JNA shall be
named as an additional named insured under each of the foregoing
policies (including any umbrella policies). JNA shall at its
option purchase fire and all risk extended coverage insurance on
all Merchandise for the duration of the Sale in an amount equal
to the full insurable value thereof provided that the cost of
such insurance shall not exceed $60,000. If the cost of such
insurance is less than $60,000, such insurance expense shall
constitute an Expense. If the cost of such insurance is equal to
or greater than $60,000, JNA may, in its sole discretion,
purchase such insurance coverage, provided, however, that all
such costs in excess of $60,000 shall be at JNA's sole expense.
The Debtors shall be named as additional insureds under such
policy and any monies realized on account of such insurance
coverage shall be included in Proceeds. All Proceeds arising
from losses of or damages to Merchandise realized from the
insurance coverage referred to above shall be included as
Proceeds for all purposes of this Agreement, including, without
limitation, determining the Agent Fee payable to JNA in
accordance with Section 9 hereof.
B. Certificates evidencing the existence of the
insurance described above to be maintained by the Debtors shall
be furnished by the Debtors to JNA prior to the Inventory
Conclusion Date. All policies maintained by the Debtors shall be
amended to provide that the insurer will give fifteen (15) days'
written notice to JNA in advance of the date of any cancellation
of the policy or the effective date of any reduction in coverage.
In the event the Debtors' insurer is unwilling to agree to amend
the applicable policies as provided above, than the Debtors shall
provide JNA with notice of any such cancellation or reduction in
coverage promptly after it becomes aware of such event.
XIV. INDEMNIFICATION.
A. JNA, in addition to any other indemnity provisions
contained herein, hereby agrees to indemnify, defend and hold
harmless the Debtors from and against all losses, damages and
expenses, including, without limitation, interest, penalties and
attorneys' fees and expenses, actually imposed upon or incurred
by the Debtors by reason of or resulting from a material breach
of any representation, warranty, agreement or obligation of JNA
contained in or made pursuant to this Agreement (including but
not limited to any acts against or representations to customers
at any Store) or gross negligence or intentional or willful
misconduct in conducting the Sale, including, without limitation,
matters related to any damage or destruction of any Store or any
fixtures, equipment, furnishings, furniture and all appurtenances
thereto, in each case determined by a Final Order of a court
having appropriate jurisdiction. The foregoing indemnity shall
not be applicable to any such demand, claim, action or cause of
action, assessment, loss, damage, liability, cost or expense
resulting from or attributable to the Debtors' gross negligence
or willful misconduct.
B. The Debtors agrees to indemnify and hold harmless
JNA from and against all losses, damages and expenses, including,
without limitation, interest, penalties and attorneys' fees and
expenses, actually imposed upon or incurred by JNA directly or
indirectly by reason of or resulting from (i) a material breach
of any warranty, representation, agreement or obligation by the
Debtors contained or made pursuant to this Agreement or (ii) the
Debtors' failure to make any repairs to the Stores of a kind
specified in Section 13.3 of this Agreement and necessary to
conduct the Sale and provided JNA has notified the Debtors of any
needed repair of which JNA was aware or should have been aware,
in each case determined in a Final Order of a court having
appropriate jurisdiction. The foregoing indemnity shall not be
applicable to any such demand, claim, action or cause of action,
assessment, loss, damage, liability, cost or expense resulting
from or attributable to the JNA's gross negligence or willful
misconduct. As security for the prompt payment in full to JNA of
all of the Debtors' obligations to JNA under this Agreement,
including without limitation any obligation of the Debtors pur-
suant to the indemnity provisions under this Subsection 15.2, the
Debtors hereby grant, on the Closing Date, to JNA a continuing,
first priority security interest in, lien upon and right of
setoff against the (a) Merchandise and (b) proceeds thereof in an
amount not to exceed the Agent Fee.
C. Each party represents and warrants to the other
that no broker, finder or agent has been employed with respect to
this transaction, and each party agrees to indemnify and hold
harmless the other from any claims by any broker, finder or agent
claiming compensation in respect of this transaction, alleging an
agreement by the Debtors or JNA, as the case may be.
D. It shall be a condition of the hold harmless and
indemnification provisions of this Agreement that the party
against which such hold harmless or indemnification is sought
receive reasonably prompt notice of any claim against the other
party hereto. The party against which such hold harmless or
indemnification is sought shall have the right, at its own
expense, to participate in the defense of such claim.
XV. OCCUPANCY OF STORES.
A. The Debtors shall provide to JNA the right to use
and occupy each Store for purposes of the Sale without charge for
rent, percentage rent and other lease charges, property taxes,
insurance, common area charges and maintenance, trash removal and
equipment maintenance or other occupancy charges of any kind or
nature whatsoever commencing at the Sale Commencement Date for
such Store and ending at the Sale Termination Date for the Stores
including, without limitation, the right to use, or receive the
services of, as the case may be, without charge, except as
otherwise provided in this Agreement, the Store premises, all
utilities, all engineering employees employed by the Debtors at
the Stores on the Sale Commencement Date, and all trade fixtures,
equipment, furniture and appurtenances therein (other than those
belonging to rack vendors, subtenants, concessionaires or licens-
ees) including, without limitations, cash registers and ADT or
similar security system. The Debtors shall not remove any Store
Fixtures and Equipment necessary to the conduct of the Sale
during the Sale. The Debtors shall not remove any sensormatic
and surveillance equipment (except for tags) located in the
Stores during the course of the Sale.
B. When and to the extent the Debtors are present in
any of the Stores during the Sale, the Debtors will not
interfere, directly or indirectly, with the conduct of the Sale.
XVI. TERMINATION OF SALE.
On the Sale Termination Date, JNA shall leave each of
the Stores vacant, broom clean and in good order and condition
except for normal wear and tear; provided, however, that JNA
shall leave any unsold Store Fixtures and Equipment, without any
fee, cost or expense to JNA.
XVII. PARTIES IN INTEREST.
Subject to Section 20, all of the terms and provisions
of this Agreement shall be binding upon and inure to the benefit
and be enforceable by the permitted assigns and successors in
interest of the respective parties hereto.
XVIII. GOVERNING LAW.
This Agreement shall be construed, interpreted and
governed by the laws of the State of New York.
XIX. ASSIGNMENT.
JNA shall not assign its obligations under this
Agreement to any other person without the Debtors' prior written
consent.
XX. NO AMENDMENT.
This Agreement constitutes the entire understanding
between the parties and shall not be amended or modified except
by means of a written instrument executed by all parties.
XXI. NOTICES.
All notices, requests, demands and other communications
between the parties shall be in writing and shall be delivered
only by hand, by certified or registered mail or by nationally
recognized overnight courier service. Notices shall be deemed to
have been given as of the date of delivery if delivered by hand
and as of the day of receipt if sent by certified or registered
mail or by nationally recognized or overnight courier service:
TO: Jubilee Limited Partnership
c/o Schottenstein Professional Asset Company
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attention: Doc Xxxxxx
Nassi Xxxxxxxxx Company, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, CEO
- and -
Nassi Xxxxxxxxx Company, Inc.
00000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Alco Capital Group, Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx, CEO
copy to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
TO: Edison Brothers Stores, Inc.
000 Xxxxx Xxxxxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
copy to: Weil, Gotshal & Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
The attorneys for the respective parties are authorized to give
notice hereunder.
XXII. COUNTERPARTS.
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but
both of which together shall constitute one and the same instrument.
XXIII. HEADINGS.
The headings in the sections of this Agreement are
inserted for convenience only and shall not constitute a part
thereof.
XXIV. FORCE MAJEURE.
Neither party shall be liable to the other for failure
or delay in performance of any of its obligations under this
Agreement caused by floods, earthquakes, other Acts of God,
fires, wars, riots, strikes and similar hostilities, government
regulations, or actions, or other causes beyond such party's
control or, without limitation, for any consequential or
incidental damages arising from any of the foregoing.
IN WITNESS WHEREOF, the parties hereto, by and through
their duly authorized officers, have caused this Agreement to be
duly executed as of the day and year first above written.
EDISON BROTHERS STORES, INC.
on behalf of itself and those of its subsidiaries listed on
Exhibit A hereto.
By:/s/Xxxxx X. Xxxxxx, Xx.
Name: Xxxxx X. Xxxxxx, Xx.
Title: Executive Vice President and
Chief Financial Officer
JUBILEE STORES
By:/s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
NASSI XXXXXXXXX COMPANY, INC.
By:/s/Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
ALCO CAPITAL GROUP, INC.
By:/s/Xxxx Xxxxx
Name: Xxxx Xxxxx
EXHIBIT "A"
LIST OF EDISON BROTHERS STORES, INC.'S AFFILIATES
Edison Brothers Apparel Stores, EBSS-Wisconsin, Inc.
Inc. EBSS-Northeast, Inc.
Edison Brothers Shoe Stores, EBSS-South, Inc.
Inc. EBSS-mideast, Inc.
Edison Paymaster, Inc. EBSS-Michigan, Inc.
Edison Brothers Redevelopment EBSS-East, Inc.
Corporation EBSS-Ohio, Inc.
Edbro Missouri Realty Company, EBSS-Pennsylvania, Inc.
Inc. EBSS-Texas, Inc.
Edison Alabama Stores, Inc. EBSS-West, Inc.
Edison Arkansas Stores, Inc. Edison Puerto Rico Stores, Inc.
Edison Colorado Stores, Inc. Ebscat, Inc.
Edison Brothers Company Xxxxxxx Clothes, Inc.
Edison Hawaii Stores, Inc. Z&Z Fashions, Ltd.
Edison Illinois Stores, Inc. Xxxxxxx-Rossville, Inc.
Edison Kansas Stores, Inc. Edison Brothers Mall Entertainment
Edison Kentucky Stores, Inc. Inc.
Edison Louisiana Stores, Inc. Horizon Entertainment, Inc.
Edison Maryland Stores, Inc. Time-Out Family Amusement Centers,
Edison Massachusetts Stores, Inc.
Inc. Tofac of Puerto Rico, Inc.
Edison Michigan Stores, Inc. Edison Brothers Stores
Edison Minnesota Stores, Inc. International, Inc.
Edison Mississippi Stores, Inc. Edisur, Inc.
Edison Nebraska Stores, Inc. EBS Holdings Corp.
Edison New Jersey Stores, Inc. Sacha Shoes, Ltd.
Edison New Mexico Stores, Inc. Xxxxxx'x of California
Edison New York Stores, Inc. Xxxxxx Xxxxxxxx Warehouse, Inc.
Edison Ohio Stores, Inc. Xxxxx Xxxxxxxxxx XXX #0, Inc.
Edison Oklahoma Stores, Inc. Edbro Missouri USG #2, Inc.
Edison Oregon Stores, Inc. Xxxxx Xxxxxxxxxx XXX #0, Inc.
Edison Pennsylvania Stores, Inc. Industrial Design, Inc.
Edison Tennessee Stores, Inc.
Edison Texas Stores, Inc.
Edison Utah Stores, Inc.
Edbro Ohio Realty, Inc.
EBSS-Montana, Inc.EBSS-North
Central, Inc.
EBSS-Indiana, Inc.
EBSS-Iowa, Inc.
EBSS-Kansas, Inc.
Exhibit C
Tradenames
Xxxx
XX
Jeans West
J. Riggings
MOSA
Oaktree
Oaktree Outlet
Size 0-0-0
Xxxxxxx
Xxxxxxx & Xxxxxxx
Xxxxxxx X
Inventory Instructions
The Physical Inventory shall be taken by a profes-
sional, independent inventory service mutually agreed upon by the
Debtors and JNA. Item values only shall be recorded by depart-
ment for each Store. Merchandise shall be recorded as follows:
1. Damaged Goods
2. Out of Season Goods
3. All other Merchandise
In attendance at the Physical Inventory shall be the
Store manager and knowledgeable key people of THE DEBTORS and one
or more supervisors of JNA. Any count may be challenged on the
date of Inventory by either the Debtors' supervisor or JNA's
supervisor and a recount initiated. The professional inventory
service shall record the item values of Merchandise at a Store
other than Damaged Goods and Out of Season Goods at the lesser of
(i) the lowest ticketed price for each particular item of
Merchandise (including Layaway Merchandise) (net of any
applicable permanent reductions, deductions or markdowns with
respect to such item of Merchandise indicated on such ticket) or
(ii) to the extent practicable or determinable, the price
recorded in respect of each item of Merchandise at each Store on
the Inventory Commencement Date in the Debtors' cash register
system, and in either case excluding any point of sale and
promotional hang tags; provided, however, that (x) where
identical items of Merchandise on the Inventory Commencement Date
bear different prices, the Retail Price of each item of such
Merchandise shall be the lowest ticketed price of such identical
items in the event that clause (ii) above does not apply to such
Merchandise; and (y) the Retail Price of each item of Merchandise
shall not include any sales, gross receipts, excise or similar
values of Damaged Goods, and Out of Season Goods in accordance
with the following definitions:
DEFINITIONS:
1. Damaged Goods are goods which are incomplete or so
damaged or defective that the Debtors would not have offered such
goods for sale at full retail price prior to the Sale or samples
or items requiring labor to become saleable or incomplete sets.
The item values of Damaged Goods shall be agreed upon by the
Debtors and JNA at the Physical Inventory. In the event the
Debtors and JNA cannot agree, the Damaged Goods shall be excluded
from the Merchandise and the Sale.
2. Out of Season Goods are goods that are out of
seasonand that normally would not be sold or be offered for sale
in the current selling season at regular retail price and that
pertain to a holiday or selling season which will not occur for
at least one hundred (100) days after the Inventory Commencement
Date. The item values of Out of Season Goods shall be the lesser
of the current ticketed price and 50% of the original ticketed
price for such item.
Damaged Goods and/or Out of Season Goods found on the
selling floor shall be identified listed as "D", if Damaged
Goods, or "OS", if Out of Season Goods. Damaged Goods and/or Out
of Season Goods elsewhere shall be segregated and listed as "D"
or "OS", as the case may be, in the location they presently
occupy.
In the event of a dispute which cannot be reconciled by
the Debtors' and JNA's supervisors on the premises during the
Inventory Period concerning Damaged Goods and/or Season Goods,
___________________, as JNA's representative, and ___________ as
the Debtors' representative shall make final reconciliation or
the goods shall be excluded from the Merchandise and the Sale.
Exhibit E
Pre-Approved Promotional Materials
