STANDSTILL AGREEMENT
This Agreement is made as of this 16th day of January, 2001, between
eToys Inc. and all its domestic Subsidiaries and Affiliates ("eToys") and the
Informal Committee of Unsecured Creditors of eToys (the "Committee").
W I T N E S S E T H
WHEREAS, on January 10, 2001 (the "Committee Organization Date"), the
Committee organized itself, at the request of eToys, and as initially organized
is comprised of the following companies: Mattel, Inc. (Chairperson) Hasbro, Lego
Systems, Inc., X.X. Xxxxxxxxx & Sons Company, Staffmark Investments, LLC, Fir
Tree Capital, Pacific Asset Management; and
WHEREAS, the Committee has advised eToys that it has retained the
services of Xxxxx, Bonacquist & Fox LLP ("TB&F") as its counsel; and
WHEREAS, eToys is desirous of entering into an out of court
composition, extension or other acceptable agreement providing for the treatment
of its outstanding claims (the "Composition Agreement') and further, eToys has
agreed to allow the Committee a reasonable period of time to conduct such due
diligence as it may require to determine the feasibility and advisability of
entering into such a Composition Agreement (the "Standstill Period"), and
WHEREAS, other than as provided in paragraph 2 of this Agreement, eToys
has agreed that during the Standstill Period it shall make no payments,
transfers or returns of merchandise on account of any its debts or obligations
to anyone that arose or accrued prior to the date of this Agreement, without the
written consent of the Committee.
NOW THEREFORE, for valuable consideration, including the forbearance of
each Committee member, the parties hereby agree as follows:
1. This Agreement shall remain in effect and shall terminate on the
earlier of: (a) 5:00 p.m. (Pacific Time) on January 31, 2001; (b) the Committee
and eToys agree, in a writing executed in the same manner as this Agreement, to
modify, replace or terminate this Agreement; (c) eToys defaults under or
otherwise violates the terms of this Agreement and the Committee terminates this
Agreement or an order for relief under the Bankruptcy Code is entered against
eToys or an assignment for the benefit of creditors is executed by eToys
(collectively, the "Termination Date").
2. During the Standstill Period, eToys shall make no payments,
transfers or returns of merchandise on account of any of its past due debts as
of the date of this Agreement including, but not limited to, goods or
merchandise that were shipped or delivered prior to the date of this Agreement;
PROVIDED HOWEVER, during the Standstill Period, eToys shall use funds to
maintain its existing operations substantially in accordance with a budget to be
agreed upon.
3. During the Standstill period, eToys shall conduct its business in
the ordinary course and shall take no action, without the prior written consent
of the Committee and sell or otherwise transfer its assets, including inventory,
via bulk sale(s) or otherwise, outside of the ordinary course of its business.
4. Subject to the separate letter agreement, eToys will pay the
reasonable fees and expenses incurred by the Committee's professionals during
the period between the Committee Organization Date and the Termination Date.
Contemporaneously with the execution of this Agreement, eToys will wire transfer
$165,000 to TB&F. At the conclusion of the
Standstill Period, TB&F shall provide eToys, and its counsel, with a billing
statement setting forth the identity of each TB&F professional who has performed
services for and on behalf of the Committee, the rate charged by each such
professional, and the aggregate time spent by each for the service provided.
TB&F acknowledges that during the Standstill Period no legal services shall be
provided for any individual Committee Member or on behalf of any other entity
other than the Committee in connection with eToys and/or this Agreement. TB&F
will also forward copies of the expenses incurred by the Committee member.
5. During the Standstill Period, and so long as eToys has complied with
all of its obligations under the Standstill Agreement, the members of the
Committee will (a) forebear from exercising such rights as they may have against
eToys for payment or collection of sums that may be due to them, and (b) either
jointly or individually, forebear from participating in the filing of an
involuntary bankruptcy proceeding or state court receivership against eToys.
Such forbearance is not a waiver of any portion of the claims of any Committee
member.
6. This Agreement does not create a joint venture or create a
partnership between the parties.
7. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof. All prior agreements and
understandings are merged herein and there are no oral understandings apart form
the terms of this Agreement. This Agreement may be altered, amended or modified
only by a written instrument signed by all parties to this Agreement.
8. This Agreement and any issues arising hereunder will be governed by
the laws of the State of California.
9. This Agreement may be executed in one or more counterparts,
including facsimile transmittals, each of which shall be deemed an original, and
all of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
the day and year first above written.
ETOYS INC.
By: /s/ Xxxxx Xxxxxxx
Title: Vice President and General Counsel
Printed Name: Xxxxx Xxxxxxx
THE INFORMAL COMMITTEE OF
UNSECURED CREDITORS
By: __________________________________
Committee Member:_____________________
Company: _____________________________
Printed Name: __________________________
