Exhibit 10.4
EXHIBIT O
KAV Term Sheet
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Consignment Agreement
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Consignor: KAV Inventory, LLC, a Delaware limited liability company ("KAV")
Consignee: KIAC, Inc., or such other party that is the successful bidder for
the assets of Xxxxxxxxx Industries, Inc., as debtor-in-possession
(such party, "Consignee")
Lender: Bank of America, N.A. ("BofA")
Parties to
Agreement: Consignee
KAV
BofA
Terms of New
Consignment
Agreement: Collection/Disbursement of Proceeds:
Year 1: First $15 million of sales from KAV's inventory (net of
-------
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
75% to KAV (for the benefit of BofA) and 25% to Consignee.
Next $15 million of sales from KAV's inventory (net of
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
70% to KAV (for the benefit of BofA) and 30% to Consignee.
Next $15 million of sales from KAV's inventory (net of
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
60% to KAV (for the benefit of BofA) and 40% to Consignee).
Year 2: First $10 million of sales from KAV's inventory (net of
-------
Reimbursable Expenses) (the "Net Proceeds") shall be
distributed 75% to KAV (for the benefit of BofA) and 25% to
Consignee).
Next $10 million of sales from KAV's inventory (net of
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
70% to KAV (for the benefit of BofA) and 30% to Consignee).
Next $10 million of sales from KAV's inventory (net of
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
60% to KAV (for the benefit of BofA) and 40% to Consignee).
Year 3: First $6 million of sales from KAV's inventory (net of
-------
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
75% to KAV (for the benefit of BofA) and 25% Consignee).
Next $6 million of sales from KAV's inventory (net of
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
70% to KAV (for the benefit of BofA) and 30% Consignee).
Next $6 million of sales from KAV's inventory (net of
Reimbursable Expenses) (the "Net Proceeds") shall be distributed
60% to KAV (for the benefit of BofA) and 40% Consignee).
Other Terms:
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1. Gross selling price should be equal to or greater than 90%
of mutually pre-agreed market values.
2. No minimum required yearly sales levels apply other than the
levels as described above to effect the consignment fee
structure. Any party is allowed to terminate the agreement
only in case of breach of a material term of the agreement.
3. At the closing of the transaction pursuant to which
Consignee has acquired the assets of Xxxxxxxxx, Consignee
will pay to KAV (for the benefit of BofA) any balance owing
to KAV from sales of KAV inventory made by Xxxxxxxxx between
the date of execution of the related asset purchase
agreement and the closing of such transaction.
4. Payment terms to KAV will be sixty (60) days from month-end
for sales occurring during the month.
5. The agreement will provide a mechanism for prioritizing
sales of KAV inventory and overlapping inventory either
owned by, or consigned with, Consignee.
