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 Xx. 00-
0000 (XXX) 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 (collectively, 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 covenants 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:
1. DEFINITIONS.
For purposes of this Agreement, the terms listed below shall
have the meanings indicated:
1.1 "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.
1.2 "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.
1.3 "Approval Order shall have the meaning ascribed to such
term in Subsection 4.2 hereof.
1.4 "Bankruptcy Court" shall have the meaning ascribed to
that term in the recitals hereof.
1.5 "Bonus Plan" shall have the meaning ascribed to that term
in Subsection 4.3 of this Agreement.
1.6 "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.
1.7 "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.
1.8 "Case" shall have the meaning ascribed to that term in
the recitals hereof.
1.9 "Closing Date" shall mean such date after entry of the
Approval Order as is mutually agreed upon by the Debtors and JNA.
1.10 "Damaged Goods" shall have the meaning ascribed to that
term in the Inventory Instructions.
1.11 "Debtors" shall have the meaning ascribed to that term
in the preamble of this Agreement.
1.12 "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.
1.13 "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.
1.14 "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.
1.15 "Guaranteed Return" shall have the meaning ascribed to
that term in Subsection 8.1 of this Agreement.
1.16 "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").
1.17 "Inventory" shall mean the written reports and
computations specified in Section 3 of this Agreement.
1.18 "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.
1.19 "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.
1.20 "Inventory Instructions" shall mean the written
instructions to be delivered by the Debtors and JNA to the Inventory
Service pursuant to Subsection 3.2, in the form of Exhibit "D" hereto,
governing the manner of determining the Inventory.
1.21 "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.
1.22 "Inventory Service" shall mean R.G.I.S. and/or another
inventory service mutually acceptable to the Debtors and JNA.
1.23 "Issuing Bank" shall have the meaning ascribed to that
term in Subsection 8.1 in this Agreement.
1.24 "Layaway Merchandise" shall mean Merchandise which is
held in layaway on the Sale Commencement Date.
1.25 "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.
1.26 "Lessor" or "Lessors" shall mean the lessor, lessors, or
other parties to the Lease Instruments.
1.27 "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.
1.28 "Net Return" shall mean at any time the Proceeds (less
sales Taxes) realized from the Sale at such time divided by the Retail
Value.
1.29 "Out of Season Goods" shall have the meaning ascribed to
that term in the Inventory Instructions.
1.30 "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.
1.31 "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.
1.32 "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.
1.33 "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.
1.34 "Sale" shall mean the sales of Merchandise at each of
the Stores as provided in Section 4 of this Agreement.
1.35 "Sales Budget" shall have the meaning ascribed to that
term in Subsection 4.3 in this Agreement.
1.36 "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.
1.37 "Sale Expenses" shall have the meaning ascribed to that
term in Subsection 7.2 of this Agreement.
1.38 "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.
1.39 "Section" and "Subsection" shall mean a section or
subsection of this Agreement.
1.40 "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.
1.41 "Store Fixtures and Equipment" shall mean all of the
fixtures, equipment, furniture, furnishings and all appurtenances
thereto located at the Stores.
1.42 "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.
1.43 "Taxes" shall mean those Taxes which JNA is required to
pay to the Debtors pursuant to Subsection 4.10 of this Agreement.
2. 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 condi-
tions of this Agreement.
3. INVENTORY.
3.1 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 acceptable 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 Commencement Date,
and (ii) be counted and added to the Inventory, if possible, during the
Inventory Period, and if not, immediately thereafter.
3.2 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 com-
putation of the value of the Inventoried Goods at the Stores computed at
the Retail Price.
3.3 The Debtors shall have one or more of their 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. 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 represen-
tatives 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.
3.4 Unless the parties otherwise agree, during the Inventory
Period no item of Merchandise shall be shipped or delivered from the
Stores.
3.5 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 agree-
ment 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.
4. CONDUCT OF THE SALE.
4.1 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 Termination 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.
4.2 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:
(a) conduct the Sale in the names set forth on Exhibit "C"
attached hereto;
(b) 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;
(c) select and schedule the number and type of personnel
required by JNA to conduct the Sales, including security personnel;
(d) determine the discount from the Retail Price at which
the Merchandise is to be sold; and
(e) consolidate Merchandise among the Stores for purposes of
the Sale.
4.3 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.
4.4 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.
4.5 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.
4.6 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.
4.7 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.
4.8 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).
4.9 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 Xxxxxxx-
xxxx 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 immediately 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.
4.10 The Debtors shall collect all sales and use taxes pay-
able 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.
4.11 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.
4.12 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 "promo-
tional 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 withheld;
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 mate-
rials 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.
4.13 The Debtors shall not, during the Sale, through use of
an agent or representative other than JNA or otherwise, conduct a "liq-
uidation", "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.
4.14 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.
4.15 The Debtors shall use reasonable efforts to program all
of the cash registers in the Stores as directed by JNA during the Sale.
5. 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:
5.1 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.
5.2 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.
5.3 Edison 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.
5.4 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.
5.5 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.
5.6 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 consistent 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 pur-
chased 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.
5.7 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.
5.8 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.
5.9 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.
5.10 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.
5.11 The Debtors have no collective bargaining agreements
with their employees, nor are any of their employees represented by
labor unions.
5.12 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.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF JNA.
6.1 Each of Jubilee, NBC and Alco hereby severally
represents and warrants as follows:
(A) 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.
(B) 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.
(C) This Agreement is the valid and binding obligation
of it enforceable in accordance with its terms, subject to receiving
approval by the Bankruptcy Court.
(D) (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.
(E) 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.
(F) 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.
(G) 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.
6.2 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.
7. EXPENSES.
7.1 The Debtors shall be liable for and shall pay the
following items with respect to the Stores through the Sale Termination
Date:
(A) Gross Rentals (including percentage rent, common
area charges, real estate taxes and insurance on the Stores) and
other similar occupancy costs;
(B) Ad valorem taxes, if any;
(C) Maintenance of all items described in Subsection
5.6;
(D) Utilities (except telephone charges for calls
made);
(E) Store alarm systems; and
(F) All other expenses which are not Sale Expenses as
more fully described in Subsection 7.2 hereof.
7.2 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"):
(A) All direct Payroll Costs for the Debtors' employees se-
lected and actually used by JNA during the Sale, including Store manager
bonuses;
(B) All compensation and related expenses (including actual
out-of-pocket travel expenses) payable to JNA's supervisors;
(C) The Bonus Plan for the Debtors' employees and JNA's
supervisors;
(D) The cost and expenses of an armored car service;
(E) Bank card fees, charges and chargebacks;
(F) Telephone charges for calls made (which excludes
instrumental rental, telephone line and phone unit costs);
(G) The cost and expense of moving or consolidating
Merchandise among the Stores;
(H) Security costs;
(I) Trash hauling costs;
(J) Costs and premiums associated with fire and all risk
extended coverage insurance up to $60,000; and
(K) 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.
7.3 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.
7.4 JNA shall have reasonable access to the Debtors records
necessary for verification of the Sale Expenses.
8. GUARANTEED RETURN.
8.1 JNA hereby warrants by way of financial accommodation 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:
(A) be presentable on or after April 20, 1996;
(B) expire if not presented on or before May 31, 1996;
(C) be presentable only at an office of the Issuing
Bank in St. Louis, Missouri or New York, New York;
(D) 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;
(i) 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;
(ii) The amount due to be drawn hereunder is
$_________;
(iii) The amount to be drawn hereunder does not
exceed the amount available on the date hereof to be
drawn under the Letter of Credit;
(iv) The Letter of Credit has not expired prior to
the delivery of this letter and the accompanying sight
draft; and
(v) 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.
9. AGENT FEE TO JNA FOR SERVICES RENDERED.
9.1 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.
9.2 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.
9.3 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.
10. RETURNS OF MERCHANDISE, GIFT
CERTIFICATES AND CASH CREDITS.
10.1 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.
10.2 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.
10.3 JNA shall have sole discretion to make refunds or
credits for Merchandise purchased during the Sale at no cost to the
Debtors.
11. DESTRUCTION, INTERRUPTION.
11.1 If, during the course of the Sale, any Store is
destroyed or damaged such that the Debtors would not in the ordinary
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.
11.2 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:
(i) JNA shall thereupon be relieved from its obligations 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
(ii) Neither party shall be liable to the other for damages
of any kind.
12. CONDITIONS PRECEDENT.
12.1 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:
(i) entry of the Approval Order on or before December 5,
1995
(ii) 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;
(iii) the Retail Value as of the Sale Commencement Date shall
not be less than $82 million dollars;
(iv) 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
(v) 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.
13. 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 Subsection 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 understanding 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.
14. INSURANCE.
14.1 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.
14.2 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.
15. INDEMNIFICATION.
15.1 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 representa-
tions 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.
15.2 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 pursuant 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.
15.3 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.
15.4 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.
16. OCCUPANCY OF STORES.
16.1 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, with-
out 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.
16.2 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.
17. 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.
18. 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.
19. GOVERNING LAW.
This Agreement shall be construed, interpreted and governed by
the laws of the State of New York.
20. ASSIGNMENT.
JNA shall not assign its obligations under this Agreement to
any other person without the Debtors' prior written consent.
21. 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.
22. 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.
23. 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.
24. HEADINGS.
The headings in the sections of this Agreement are inserted
for convenience only and shall not constitute a part thereof.
25. 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 B, 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,
Inc.
Edison Brothers Shoe Stores,
Inc.
Edison Paymaster, Inc.
Edison Brothers Redevelopment
Corporation
Edbro Missouri Realty Company,
Inc.
Edison Alabama Stores, Inc.
Edison Arkansas Stores, Inc.
Edison Colorado Stores, Inc.
Edison Brothers Company
Edison Hawaii Stores, Inc.
Edison Illinois Stores, Inc.
Edison Kansas Stores, Inc.
Edison Kentucky Stores, Inc.
Edison Louisiana Stores, Inc.
Edison Maryland Stores, Inc.
Edison Massachusetts Stores,
Inc.
Edison Michigan Stores, Inc.
Edison Minnesota Stores, Inc.
Edison Mississippi Stores, Inc.
Edison Nebraska Stores, Inc.
Edison New Jersey Stores, Inc.
Edison New Mexico Stores, Inc.
Edison New York Stores, Inc.
Edison Ohio Stores, Inc.
Edison Oklahoma Stores, Inc.
Edison Oregon Stores, Inc.
Edison Pennsylvania Stores, 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-Kansas, Inc.
EBSS-Indiana, Inc.
EBSS-Wisconsin, Inc.
EBSS-Iowa, Inc.
EBSS-Northeast, Inc.
EBSS-South, Inc.
EBSS-mideast, Inc.
EBSS-Michigan, Inc.
EBSS-East, Inc.
EBSS-Ohio, Inc.
EBSS-Pennsylvania, Inc.
EBSS-Texas, Inc.
EBSS-West, Inc.
Edison Puerto Rico Stores, Inc.
Ebscat, Inc.
Xxxxxxx Clothes, Inc.
Z&Z Fashions, Ltd.
Xxxxxxx-Rossville, Inc.
Edison Brothers Mall
Entertainment, Inc.
Horizon Entertainment, Inc.
Time-Out Family Amusement
Centers, Inc.
Tofac of Puerto Rico, Inc.
Edison Brothers Stores
International, Inc.
Edisur, Inc.
EBS Holdings Corp.
Sacha Shoes, Ltd.
Xxxxxx'x of California
Xxxxxx Xxxxxxxx Warehouse, Inc.
Xxxxx Xxxxxxxxxx XXX #0, Inc.
Edbro Missouri USG #2, Inc.
Xxxxx Xxxxxxxxxx XXX #0, Inc.
Industrial Design, Inc.
EXHIBIT "B-1"
LIST OF STORES TO BE
LIQUIDATED BY 12/29/95
EXHIBIT "B-2"
LIST OF STORES TO BE
LIQUIDATED BY 1/29/96
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 professional,
independent inventory service mutually agreed upon by the Debtors and JNA.
Item values only shall be recorded by department 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 tax. The professional inventory service
shall record the item 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 season and
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 loca-
tion 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
EXHIBIT F
Stores to be Self-Liquidated
