EXHIBIT 10.01
AGENCY AGREEMENT
This Agency Agreement is made as of this 22nd day of
September, 1995 by and between Xxxxxx Xxxxxxxx Partners, Inc., a
Massachusetts corporation with a principal place of business at 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000 (the "Agent") and Xxxxx
Shoe, Inc., having offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000
(the "Merchant").
WHEREAS, the Merchant operates retail shoe stores under the
Fayva name and desires that the Agent act as the Merchant's
exclusive sales agent for the limited purpose of conducting the
Sale (as hereinafter defined) for the Merchant;
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth hereinafter and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Agent and the Merchant hereby agree as follows:
1. Agency Appointment
The Agent shall serve as the Merchant's exclusive
agent to conduct "store closing", "sale on everything", or
"unrestricted public sale" sales (together, the "Sale") of all
inventory assets as further defined in subsection 2(c) hereof (the
"Merchandise") from Merchant's Fayva retail locations located at
those locations identified in Exhibit 1 (the "Stores").
It is expressly agreed that Agent shall be entitled to advertise
the Sale consistent with the preceding sentence but, in any event,
only in accordance with all applicable laws and regulations and as
permitted under the terms of the leases covering the Stores (the
"Leases").
2. Merchandise
(a) Inventory
The Agent shall cause to be taken a "Retail
Price" physical inventory of the Merchandise, as defined in
subsection 2(b), to be conducted beginning at the close of business
at the Stores on September 23, 1995 (the date of the inventory
taking at a Store being the "Inventory Date"). The Stores shall be
closed, and no sales transacted, during the taking of the
inventory. Merchant and Agent shall jointly employ RGIS to conduct
such inventory, and the costs and fees of such inventory taking
service, including, without limitation, RGIS travel costs, the
hourly rate negotiated by Merchant with RGIS, and the costs of any
special report from RGIS jointly requested by Merchant and Agent,
shall be shared equally by Agent and Merchant. Other than such
costs and fees, each of Merchant and Agent shall bear their own
costs relative to the inventory taking. Merchant and Agent shall
each have representatives present during the inventory taking, and
each shall have the right to review and verify the listing and
tabulation of the inventory count as provided by the inventory
taking service. The procedures to perform the inventory taking and
its verifications are set forth in Exhibit 2(a)(i). Prior to the
inventory taking, Agent shall have reasonable access to all pricing
and cost files of inventories, inter Store transfer logs, markdown
schedules, invoices, style runs and all other documents of Merchant
relative to its inventories.
(b) Valuation
For purposes of this Agreement "Retail
Price" shall mean (i) as to shoe inventory, the ticketed price of
each item of Merchandise (as evidenced on the shoes) as sold at the
Stores at the Inventory Date and (ii) as to non-shoe inventory, the
lowest ticketed price of each item of Merchandise as sold at the
Stores at the Inventory Date, (exclusive in each case of sales,
excise and gross receipts taxes), except for "defective" goods, as
defined in Section 2(c), where "Retail Price" shall mean such value
as Agent and Merchant mutually may agree. Merchandise shall include
"on order" goods, as defined in Section 2(c), where "Retail Price"
shall mean ticketed as if they were at the Stores at the time of
the physical inventory taking consistent with historic and
customary ticketing practices of Merchant and with representations
in Section 7(a)(vi). If any tickets on Merchandise have been
altered, or if two (2) or more tickets appear on Merchandise, then
the lowest ticket price shall be "Retail Price". In no event have
tickets on Merchandise been marked up, or removed and replaced
with higher ticketed prices, within the last sixty (60) days.
(c) Merchandise Subject to this Agreement
(i) For purposes hereof,
(A) Merchandise shall mean
(1) all finished goods located at
the Stores as of the Sale Commencement Date; (as computed based on
the inventory physically counted on the Inventory Date increased
for sales and markdowns (retail reductions) that were recorded from
the Sale Commencement Date to the Inventory Date and decreased for
sales and markdowns that were recorded from the Inventory Date to
the Sale Commencement Date, as applicable);
(2) the receipt of any on-order
goods up until the Inventory Date;
(3) all Fayva finished goods
located in the distribution centerin Canton, MA;
(4) up to $6,000,000 at "Retail
Price" of finished goods purchased from other divisions of
Merchant's parent corporation, X. Xxxxx, Inc., as outlined in
Exhibit 2(c)(i)(A)(4);
(5) "on-order" goods; and
(6) "defective" goods.
(B) "On order" goods are finished goods
inventory delivered F.O.B. Stores at Agent's direction; Merchant
shall use best efforts to ticket prior to delivery the on-order
goods, and to supply tickets for goods which have not been
ticketed. All on-order goods shall be consistent with
representations in Section 7(a)(vii), and shall be delivered in
the amounts and in accordance with the schedule as described in
Exhibit 2(c)(i)(B).
(C) "Defective" goods are goods agreed
upon and identified by Merchant and Agent as defective or otherwise
not salable in the ordinary course during the inventory taking
process because they are ripped, worn, soiled, mismatched, or
contain other similar characteristics. Display Merchandise shall
not be deemed defective per se. If Merchant and Agent cannot agree
on the value of an item that is defective, then such item shall be
excluded from Merchandise for purposes of this Agreement and shall
be removed by Merchant from the Stores at Merchant's expense as
soon thereafter as practical.
(ii)Merchandise shall not include goods retained
by Merchant as bailee; furnishings, fixtures and equipment; and
goods on layaway or held for repair. There are no consigned goods
and Merchant has no leased or licensed departments in the Stores or
special orders. Merchant shall remain responsible for processing
and handling all goods on layaway or held for repair and contracts
relating thereto, and Agent shall have no cost, expense or
responsibility in connection therewith, except Agent shall
cooperate with Merchant in administering layaways, repairs and
similar matters for consumers.
(d) Supplies
Merchant does not represent that adequate
stocks of supplies (e.g. boxes, bags, twine) are or will be
available at the Stores as of the Sale Commencement Date, but Agent
shall have the right to obtain additional supplies from Merchant at
Merchant's cost plus freight charges reasonably needed for Agent's
proper conduct of the Sale.
3. Sale
(a) Term
The Sale shall commence on September 28,
1995 (the "Sale Commencement Date"). The Agent shall complete the
Sale no later than January 15, 1996 and shall have the discretion
to terminate the Sale at any Store at any time within that time
frame (with Agent agreeing to terminate the Sale in a majority of
the Stores by December 31, 1995 subject in any event to Agent's
right to have no less than 400 Store weeks to run the Sale in
January, 1996). The date the Sale ceases to operate at a Store
shall be the "Sale Termination Date". Agent shall provide Merchant
not less than seven (7) days notice prior to the Sale Termination
Date at a Store. The period from the Sale Commencement Date to the
Sale Termination Date as to each Store shall be hereinafter
referred to as the "Sale Term."
(b) Rights of Agent; Final Sales
(i) The Agent shall conduct the Sale
during the Sale Term in the name of and on behalf of the Merchant
in a commercially reasonable manner and in compliance with
applicable laws, regulations and ordinances, and the terms of the
Leases. Subject to the foregoing, the Agent, in the exercise of
its sole discretion, shall be entitled
(A) subject to Section 3(b)(iii), to
establish and implement advertising and promotion programs
consistent with the "store closing", "sale on everything" and
"unrestricted public sale" themes;
(B) to establish Sale prices;
(C) to use, during the Sale Term and for the
sole purpose of selling the Merchandise, without charge, all
furniture, fixtures, equipment, advertising materials, existing
supplies as located at the Stores, intangible assets (including
Merchant's name, logo, and tax I.D. numbers) and other assets of
Merchant (whether owned, leased, or licensed) which will be
returned to Merchant at the end of the Sale Term, to the extent the
same (1) are remaining at the end of the Sale Term in the same
condition as at the date hereof, reasonable wear and tear
excepted, (2) have not been used (e.g. supplies) or (3) otherwise
have not been disposed of through no fault of Agent;
(D) to use the Merchant's personnel
at the Stores' locations, to the extent that the Agent, in the
exercise of its discretion, shall deem appropriate, but Agent
shall comply in all respects with Merchant's human resource
policies which will be disclosed to Agent in writing prior to the
Sale Term;
(E) to have access to the Stores upon
the execution of this Agreement to prepare for the Sale in a manner
so as not to disrupt Merchant's ongoing business operations, and
during the Sale Term to use all Stores keys, case keys, security
codes, and safe and lock combinations to gain access to and to
operate the Stores, and;
(F) to transfer Merchandise between
Stores if legally permissible.
(ii)All sales of Merchandise will be "final
sales" and "as is" and all advertisements and sales receipts will
reflect the same and shall comply with all applicable laws,
regulations and ordinances, and the terms of the Leases. Agent
shall not warrant the Merchandise in any manner, but will pass
manufacturers' warranties to the customers, to the extent
transferable.
(iii)Agent shall submit all advertising for the
Sale to Xxxxx Xxxxx, via facsimile at facsimile number
000-000-0000 for prior approval, which approval will not be
unreasonably withheld or delayed. The failure by Xxxxx Xxxxx or his
designee to comment on advertising within two (2) Business Days
(for purposes hereof, Business Days shall mean any weekday so long
as Merchant's office is opened for business) of its submission
shall be deemed to be approval thereof.
(c) Obligations of Agent
(i) During the Sale Term, the Agent shall
collect from sales at the Stores all Sale-related sales, excise and
gross receipts taxes payable to any taxing authorities having
jurisdiction, which taxes shall be added to the sales price and
shall be paid by the customer. The Agent shall wire transfer on a
weekly basis to the Merchant amounts so collected, reconciled
against sales audit information prepared by Merchant and furnished
to the Agent, which shall be delivered with accompanying schedules
to Merchant on a timely basis for payment of taxes. The Agent shall
cooperate fully with Merchant in connection with its compliance
with all state and local sales and other similar taxes applicable
to the transactions contemplated by this Agreement, including,
without limitation, if required by Merchant upon advice of its
accountants or attorneys, by assisting in preparing appropriate
resale certificates. It is acknowledged that Agent is acting as
Merchant's agent, and is not purchasing the Merchandise but only
guaranteeing Agent's performance hereunder as hereinafter
described, except as provided in Section 5(c) hereof. So long as
Agent complies with the provisions of this subsection, the Merchant
shall indemnify and hold harmless the Agent from and against any
and all costs including, but not limited to, reasonable attorneys'
fees, assessments, fines or penalties which the Agent sustains or
incurs as a result or consequence of the failure by the Merchant to
promptly pay such taxes to the proper taxing authorities and/or
the failure by the Merchant to promptly file with such taxing
authorities any and all reports and other documents required, by
applicable law, to be filed with or delivered to such taxing
authorities. The Agent shall indemnify and hold harmless the
Merchant, its affiliates and their respective officers, directors,
and employees from and against any and all costs including, but not
limited to, reasonable attorneys' fees, assessments, fines or
penalties which the Merchant sustains or incurs as a result or
consequence of the failure by Agent to fulfill its obligations
under this Section 3(c)(i).
(ii)The Agent shall pay, or if paid by Merchant,
reimburse Merchant for, Store-level operating expenses of the Sale
which arise during the Sale Term at the Stores, limited to the
following: base payroll and related payroll taxes, workers'
compensation and benefits of Merchant's employees used by Agent
(with such taxes, workers' compensation and benefits being 20% of
base payroll in the aggregate for all such employees used, and
either due or accrued during the period of the Sale); costs of
additional security including, without limitation, courier and
guard service if applicable; fifty percent (50%) of the fees and
costs of the inventory taking service; retention bonuses for
employees as may be paid by Agent as hereinafter provided; on-site
supervision (including base fees and bonuses); inventory insurance;
advertising and signage; long-distance telephone expenses as are
attributable to the Sale; credit card fees, chargebacks and
discounts; bank service charges, costs for additional supplies;
costs of security personnel; fees and charges required to comply
with all laws and regulations applicable to the Sale; Store cash
theft; inter-Store delivery costs as directed by Agent during the
Sale; freight charges for inter-Store deliveries to Stores during
the Sale; and all costs and expenses of providing such additional
services which the Agent in its discretion considers appropriate
(collectively, the "Expenses"). "Expenses" shall not include rent,
percentage rent, HVAC, CAM, building maintenance, real estate
taxes, merchant association dues, Store security systems,
utilities, trash removal and building insurance and structural
repair relating to the Stores ("Occupancy Charges") which will
remain the liability and responsibility of Merchant and which
Merchant represents will be paid when due during and for the Sale
Term. Notwithstanding anything in this Agreement to the contrary,
the Agent's obligation to reimburse Merchant for Expenses shall
survive the term of this Agreement and the termination of the Sale.
"Expenses" specifically excludes costs and expenses for Merchant's
central administrative services necessary for the Sale, including,
but not limited to, MIS services (which includes maintenance and
leases on Store-level POS equipment), payroll processing, inventory
reconciliation, processing and handling, data processing and
standard reporting, all of which Merchant shall provide to Agent,
but only to the extent Merchant does not incur costs in providing
such services that, but for the existence of this Agreement and the
Sale, would not have been incurred. Expenses specifically excludes
any other costs and expenses payable by Merchant and employee
benefit costs (except as noted above). All Expenses shall be paid
to or on behalf of Merchant by Agent on each Wednesday for the
prior week's (i.e. Sunday through Saturday) Expenses. The Agent
will maintain and provide to Merchant sales records to permit
calculation of and compliance with any percentage rent obligations
under Leases.
(iii)During the Sale Term, the Merchant shall
process the base payroll for all Merchant employees utilized by the
Agent at the Stores' locations. Such employees will be identified
by Agent prior to the Sale Commencement Date. Agent may stop using
any such employee at any time during the Sale, and will notify
Merchant at least seven (7) days prior thereto, except "for cause"
such as dishonesty, fraud or breach of employee duties and as to
which "for cause" reasons no notice shall be required, it being
understood that the Agent shall not have any right to hire or
terminate the actual employment by Merchant of its employees. Each
week during the Sale Term the Agent shall pay to Merchant, or shall
deposit to an account designated by the Merchant, the base payroll
plus related payroll taxes, workers' compensation and benefits.
Merchant has provided Agent with base payroll and related payroll
taxes and benefits on Exhibit 3(c)(iii). Merchant shall be
permitted, during the Sale Term to offer employees of the Stores
positions with stores from other divisions of the Merchant to
commence after the Sale Term, but may not actually transfer
employees to other divisions without Agent's consent prior to or
during the Sale Term, which consent will not be unreasonably
withheld after the first nine (9) weeks of the Sale. The Agent
shall not be responsible for reimbursement or payment of any other
compensation or costs due to employees, including but not limited
to vacation pay, severance pay, sick pay (non-exempt only),
leave-of-absence pay, pension benefits or amounts required to be
paid by statute or law (e.g. WARN Act liability) (except as the
same may be payable as "benefits" subject to the limit referred to
in Section 3(c)(ii) hereof). Nothing herein shall make Agent liable
under any collective bargaining or employment agreement, nor shall
Agent be deemed a joint or successor employer. Notwithstanding the
above, Agent shall reimburse Merchant the base payroll and related
payroll taxes, worker's compensation and benefits (limited as
aforesaid) of Merchant's Store managers and assistant Store
managers whose services no longer are needed by Agent, from the
time Agent delivers the aforesaid seven (7) day notice to
December 23, 1995, if after reasonable efforts such managers have
not been reassigned to other Stores remaining open. Agent shall
fund through Merchant's payroll, as an Expense, retention bonuses
at Agent's discretion to Store employees who work during the Sale
Term and do not voluntarily leave employment or are not terminated
"for cause". The allocation of such retention bonuses among such
Store employees at the end of the Sale Term shall be in Agent's
discretion. Agent shall review this plan with Merchant prior to
implementation.
(iv) Except as specifically set forth in this
Agreement, the Agent shall not assume, nor shall its actions be
construed as an assumption of, any of the Merchant's liabilities
or obligations which will be paid or performed by Merchant when
due.
(v) The Agent shall use its due diligence and
reasonable care in the conduct of the Sale and shall leave the
Stores premises broom clean and in the same conditions they
currently are in, reasonable wear and tear excepted.
(vi) The Agent shall indemnify and hold the
Merchant, its affiliates and their respective officers, directors
and employees harmless from and against any and all damages,
claims, costs, expenses and attorneys' fees sustained or incurred
as a result of the Agent's negligence or breach of its obligations
hereunder, including without limitation by reason of enumeration,
Agent's obligation to conduct the Sale in all respects in
accordance with applicable laws and regulations and ordinances and
the terms of the Leases.
4. Proceeds
(a) For purposes of this Agreement, Proceeds
shall mean the total amount (in dollars) of all sales of
Merchandise made under this Agreement (exclusive of sales,
excise and gross receipt taxes; returns, allowances and customer
credits and layaway redemptions). All sales will be made only for
cash, and by credit cards currently accepted by Merchant. The
Agent shall accept Merchant gift certificates and Store credits but
the amount thereof will not be Proceeds, and conditioned upon
arrangements satisfactory to Agent that such amounts will be
reimbursed to Agent by Merchant. During the first thirty (30) days
of the Sale, Agent also shall accept returns of goods sold prior to
the Inventory Date in accordance with Merchant's historic return
policy which Merchant shall provide to Agent prior to the Sale
Commencement Date, conditioned upon arrangements satisfactory to
Agent that amounts reimbursed to the customer will be paid by
Merchant to Agent. Agent shall purchase such returned goods that
are resalable, from Merchant, at 43% of Retail Price multiplied by
the inverse of the prevailing discount at the time of return.
(b) All cash Proceeds shall be deposited in
Merchant's existing Store bank accounts. Merchant will remit all
cash Proceeds transferred from Merchant's Store bank accounts into
Merchant's main bank account. On the day of receipt in Merchant's
main bank account, all such cash Proceeds shall be transferred to
Agent's designated bank account. All credit card Proceeds will be
settled daily and netted against Expenses and reimbursed weekly
upon such procedures mutually accepted by Agent and Merchant.
(c) In order to secure payment of all Secured
Obligations of Merchant to Agent hereunder, Merchant hereby grants
to Agent a security interest in the now owned and hereafter
existing Merchandise and proceeds therefrom, provided, however,
that such security interest will only be granted if the $26.6
million payment provided for in Section 5(b) below is paid to
Merchant by Agent on or before September 28, 1995. Merchant agrees
to execute such instruments as Agent may reasonably request to
record and perfect its security interest, including without
limitation UCC-1 financing statements. Immediately upon the
completion of the Sale and receipt of all sums due Agent hereunder,
Agent shall release its security interest and execute such
documents as Merchant reasonably requests therefor, including,
without limitation, UCC-3 statements.
For purposes of this Agreement, the term "Secured
Obligations" shall mean:
(i) the rights of Agent to conduct the Sale as provided
in this Agreement;
(ii) the right of Agent to reimbursement of the Guaranteed
Amount from the Proceeds of the Sale;
(iii) the right of Agent to all Proceeds in excess of the
Guaranteed Amount and the Recovery Amount, subject to Agent's
obligation to pay Expenses as defined in this Agreement.
5. Payment
(a) Payment Amounts
(i) As a guarantee of performance by
Agent hereunder, the Merchant shall receive from Agent as the
"Guaranteed Amount" the sum of forty three percent (43%) of the
Retail Price of the Merchandise. The Retail Price of the
Merchandise shall be reduced by the hard markdown reserve which
Merchant estimates on September 20, 1995, in accordance with
Merchant's historic and customary practices, to be not less than
$3.825 million. The Agent shall only be committed to provide the
Guaranteed Amount on "on order" Merchandise received in the Stores
in accordance with Exhibit 2(c)(i)(B). Additionally, to the extent
Proceeds exceed fifty five and one half percent (55.5%) of the
Retail Price of Merchandise, then Merchant shall receive sixty
percent (60%) of such excess (the "Recovery Amount").
(ii)The Guaranteed Amount and Recovery Amount in
each case relative to the Stores are conditioned upon the existence
of no less than $62 million but not more than $72 million of in-
Store Merchandise at Retail Price on the Inventory Date; not less
than $21 million but not more than $25.5 million of "on order"
goods constituting Merchandise at Retail Price delivered in
accordance with Exhibit 2(c)(i)(B); not less than $22 million but
not more than $26 million of Merchandise at the Canton, MA
distribution center as of September 28, 1995; which amount includes
not more than $6 million at Retail Price of Merchandise purchased
from other divisions of Merchant. Notwithstanding the foregoing,
Merchandise at Retail Price will not be more than $121 million. In
each case, such Merchandise shall be in conformity with the
representations in Sections 7(a)(vi) and 7(a)(vii) hereof.
(b) Time of Payment
The Agent shall pay to the Merchant by wire
transfer of immediately available funds to an account or accounts
specified by Merchant $26.6 million of the Guaranteed Amount, to be
applied to the Guaranteed Amount for Merchandise at the Stores on
the Inventory Date, based upon Merchant's representations herein,
payable by September 28, 1995 assuming all conditions set forth in
Section 6 have been satisfied. The balance of the Guaranteed Amount
for Merchandise at the Stores shall be paid within two (2) days
after the inventory service issues its final report as agreed by
Agent and Merchant. The Agent shall pay to the Merchant the
Guaranteed Amount as to Merchandise at the Canton, MA distribution
center and "on order" goods constituting Merchandise, upon
reconciliation by Agent and Merchant of the quantities and Retail
Price thereof, in accordance (as to on order Merchandise) with
Exhibit 2 (c)(i)(B), which reconciliations shall be done by each
Wednesday for deliveries to the Stores during the prior week. The
Agent shall make weekly payments of the Recovery Amount when and as
due hereunder. Additionally, Agent will purchase, on a dollar for
dollar basis, all xxxxx cash and safe funds mutually agreed upon by
Agent and Merchant at the time of inventory taking.
Merchant and Agent shall establish mutually
agreeable procedures to track all Sale receipts (inclusive of cash,
credit card and credit sales) from the Sale Commencement Date to
the date that the Agent and Merchant establish the bank account for
a Store as described in Section 4(b). The aggregate of all such
Sale receipts at the Stores (less sales tax) shall be offset from
the Guaranteed Amount payable hereunder, shall be retained by
Merchant, and shall be considered Proceeds for all purposes of this
Agreement.
(c) Agent's Payments
The Merchant shall not be entitled to the
payment of any other monies from the Sale or otherwise, except as
specified in this Agreement. Remaining Proceeds (after payment of
sales taxes, credit card fees, Expenses, the Guaranteed Amount and
Recovery Amount) shall belong to Agent in consideration of goods
and services provided by Agent hereunder. If the Agent has been
unable to sell any Merchandise during the Sale Term despite its
having conducted the Sale in accordance with the terms of this
Agreement, all Merchandise remaining at the conclusion of the Sale
shall become the property of Agent.
6. Conditions and Covenants
The Agent's and Merchant's willingness to enter into
the transaction contemplated hereunder and Agent's and Merchant's
obligations hereunder are directly conditioned upon the
satisfaction, compliance, and completion of the following at the
time or during the time periods indicated unless specifically
waived in writing by both parties:
(a) The Merchant, by the Inventory Date, having
full and complete title to the Merchandise, as to which the
Guaranteed Amount and Recovery Amount is paid, free and clear of
liens, and having granted to Agent a security interest in all
Merchandise in accordance with Section 4(c) hereof.
(b) The Merchant, by the Inventory Date, having
obtained all consents and approvals for Merchant to execute and
perform this Agreement, except those specified in Section 6(d) and
it being understood that Merchant shall not be obligated to seek
any consent of any landlord that would be required under any Lease.
(c) The Merchant, having obtained the consent of
the Banks to the transactions contemplated herein, as required
pursuant to the terms of the Company's Revolving Credit and Loan
Agreement.
(d) The Agent, on behalf of the Merchant, having
obtained all permits, licenses, consents and authorizations to
comply with applicable laws, rules, regulations and court or
administrative orders relating to operating a "store closing"
Sale and transactions contemplated hereby, if Agent decides to
operate the Sale in a manner which would require obtaining such
authorizations.
(e) The Merchant possessing and the Agent having
the right to the undisturbed and unencumbered use and occupancy of,
and the peaceful and quiet possession of, the Stores and assets
currently located thereat and the services provided thereto
throughout the Sale Term, subject, however, to the terms of the
Leases.
(f) The Merchant continuing to operate the
Stores in the ordinary course of business from the date hereof to
the Sale Commencement Date, selling goods during said period at
customary prices, not promoting or advertising any "sales" or
in-Store promotions to the public, (except Merchant's historic and
customary promotions for all its locations) and not making any
personnel moves or changes with respect to employees regularly
employed at the Stores. If any casualty or act of God substantially
inhibits the conduct of business in the ordinary course at a Store,
this Agreement shall terminate as to such Store only. All normal
course permanent markdowns will have been taken by the Inventory
Date on all inventory at the Stores on a consistent basis.
(g) Agent shall have the opportunity to inspect
the Stores and inventory as of the day prior to the Inventory Date.
7. Representations and Warranties
(a) The Merchant hereby makes the following
representations and warranties to the Agent, which shall survive
the execution and delivery of this Agreement:
(i) The Merchant is a corporation, duly
organized, validly existing and in good standing under the laws of
Delaware and has the corporate power and authority to own, lease
and operate its assets, properties and business in the Stores and
to carry on its business in the Stores as now being conducted.
(ii)The Merchant has the right, power and
authority required to execute, deliver and perform fully its
obligations hereunder, subject to the terms of the Leases. This
Agreement has been duly executed and delivered by the Merchant and
constitutes the valid and binding obligation of the Merchant
enforceable in accordance with its terms. No court order or decree
of any federal, state, or local government authority or regulatory
body is in effect that would prevent or impair consummation of the
transactions contemplated by this Agreement, and no consent of any
third party is required therefor, except for consents from
landlords under the Leases and the Banks as defined under the
Company's Revolving Credit and Loan Agreement.
(iii)The Merchant has operated the Stores in the
ordinary course of business consistent with historical operations
and has not conducted any promotions or advertised sales except
promotions and sales in the ordinary course of business from and
after June 15, 1995, all of which promotions and sales ceased as of
September 21, 1995.
(iv) The Merchant is authorized to conduct
business in all states in which Stores are located and to its
knowledge has all licenses, permits and authorizations of
governmental bodies necessary therefor other than those which, if
not possessed, would not have a material adverse affect on
Merchant's business.
(v) The Merchandise is owned free and
clear of liens, claims and encumbrances, except for the lien to be
granted to Agent hereunder.
(vi) Since August 1, 1995, Merchant has
maintained its pricing files of goods in the ordinary course and
prices charged to the public for goods (whether in-Store, by
advertisement or otherwise) are the same as set forth in the said
pricing files as of and for the periods indicated, except for the
promotions and sales described in Section 7(a)(iii). All pricing
files and records since August 1, 1995 as to all goods in the
Stores have been made available to Agent, and are true and accurate
in all material respects as to the actual cost to Merchant for
purchasing the said goods and as to the selling price to the public
therefor as of the dates and for the periods of such files and
records.
(vii) Exhibit 7(a)(vii) sets forth the levels
of "on-order" goods (as to quantity) and the mix of "on-order"
goods (as to the type, category, style, brand and description) as
of the date hereof. Goods that will constitute Merchandise at
Retail Price will be as represented in Section 5 hereof. "On order"
goods constituting Merchandise will, to Merchant's knowledge, be as
represented in Exhibit 7(a)(vii). The Guaranteed Amount and
Recovery Amount have been set in reliance upon this representation
which is material to Agent.
(viii) There has been since 1994 and
currently is, no action, arbitration, suit, notice or legal,
administrative or other proceeding before any court or governmental
body which is pending, or which has been settled or resolved, or to
Merchant's knowledge, which has been threatened against or
affecting Merchant, with respect to the business of Merchant or its
properties which would adversely affect the conduct of the Sale.
(ix) Listed on Exhibit 7(a)(x) are six (6)
reports, each of which has been initialled by Merchant and Agent.
Merchant represents and warrants that the information contained in
such reports is substantially accurate, true and correct in all
material respects as to the matters and for the time periods
therein set forth.
(b) The Agent represents and warrants to
Merchant as follows, which representations and warranties shall
survive the execution of this Agreement:
(i)The Agent is a corporation, duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power and authority to
consummate the transactions contemplated hereby.
(ii) The Agent has the right, power and authority
to execute and deliver this Agreement and perform its obligations
hereunder and has taken all necessary action required to authorize
the execution, delivery, and performance of this Agreement and no
further approval is required for the Agent to enter into and
deliver this Agreement and to perform its obligations hereunder.
(iii) This Agreement has been duly executed and
delivered by the Agent and constitutes the legal, valid and binding
obligation of the Agent enforceable against the Agent in accordance
with its terms. No court order or decree of any federal, state, or
local governmental authority or regulatory body is in effect that
would prevent or impair or is required for the Agent's consummation
of the transactions contemplated by this Agreement and no consent
of any third party is required therefor. No contract or other
agreement to which the Agent is a party or by which the Agent is
otherwise bound will prevent or impair the consummation of the
transactions contemplated by this Agreement.
(iv) No actions or proceedings have been
instituted by or against the Agent, or have been threatened, which
question the validity of this Agreement or any action taken or
to be taken by the Agent in connection with this Agreement or
that, if adversely determined, would have a material adverse
effect upon the Agent's ability to perform its obligations under
this Agreement.
(v) Any rights conferred upon or granted to
Agent hereunder, including the right to establish and implement
advertising and promotion programs subject to this Agreement, shall
be exercised by Agent in compliance with all federal, state and
local laws and the terms of the Leases, subject to Merchant's
reasonable cooperation if such cooperation is needed to comply with
such laws and Lease terms.
8. Insurance
(a) Until the expiration of the Sale Term, the
Merchant shall continue in force the insurance coverages it
currently has with respect to the Merchandise and the Stores.
The Agent shall reimburse the Merchant for costs of inventory
insurance (which is defined as an Expense) during the Sale Term
upon receipt of an invoice therefor from the Merchant and
shall be named as additional insured thereon.
(b) During the Sale Term, the Agent shall
maintain, at its cost, comprehensive public liability insurance for
injury to persons and property in accordance with Exhibit 8(b)
hereto.
9. Defaults
The following shall be "Events of Default"
hereunder:
(a) The Merchant or Agent shall fail to perform
any material obligation hereunder if such failure remains uncured
seven days after receipt of written notice thereof; or
(b) Any representation or warranty made by
Merchant or Agent proves untrue in any material respect when made;
or
(c) The Sale is terminated at a Store for
reasons other than a default, breach or action by Agent not
authorized hereunder:
Any party's damages or entitlement to equitable relief on
account of an Event of Default shall be determined by a court of
competent jurisdiction in the Commonwealth of Massachusetts.
10. Miscellaneous
(a) All communications provided for pursuant to
this Agreement must be in writing, and mailed by Federal Express or
other overnight delivery services, as follows:
If to the Agent: Xxxxxx Xxxxxxxx Partners, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Xxxxxxxx X. Xxxxx
If to the Merchant: Xxxxx Shoe, Inc.
000 Xxxxxxxx Xx.
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
(b) This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of
Massachusetts.
(c) This Agreement contains the entire agreement
between the parties hereto, and no variations shall be binding
upon any party unless set forth in a document duly executed by and
on behalf of such party.
(d) No consent or waiver, express or implied, by
any party, to or of any breach or default by the other in the
performance by the other of its obligations hereunder shall be
deemed or construed to be a consent or a waiver to or of any other
breach or default in the performance by such other party of the
same or any other obligations of such party.
Failure on the part of any party to complain of any act or failure
to act by the other party or to declare the other party in default,
irrespective of how long such failure continues, shall not
constitute a waiver by such party of its rights hereunder.
(e) This Agreement shall inure to the benefit of
and be binding upon the undersigned, and their respective
successors and assigns.
(f) This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate
counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the Agent and Merchant hereby execute
this Agreement by their duly authorized representative as a sealed
instrument as of the day and year first written above.
XXXXXX XXXXXXXX PARTNERS, INC.
By:/s/ Xxxxxxx Xxxxxx
---------------------------
Its: Chief Executive Officer
XXXXX SHOE, INC.
By:/s/ Xxxx X. Xxxxxxxxx
---------------------------
Its: Senior Executive Vice President
